2026 (3) TMI 82 - HC - GST

Provisional Attachment: absence of a reasoned order invalidates attachment; hearing and reasoned decision required to protect revenue.

Provisional attachment under Section 83 requires formation of an opinion that attachment is necessary to protect revenue and must not be a routine or ... Examination of the statutory scheme governing provisional attachment - formation of an opinion connected to protecting revenue - discrepancies of non payment of taxes on taxable supply of construction services to existing owners namely the society and MHADA - right to submit objection and to be heard under Rule 159(5) - requirement to record reasons when rejecting objections to attachment. Provisional attachment requires formation of opinion and reasoned order - right to submit objection and to be heard under Rule 159(5) - requirement to record reasons when rejecting objections to attachment - HELD THAT: - The court held that provisional attachment under Section 83 is a draconian power that must be exercised only upon formation of an opinion proximate to protecting government revenue and after due deliberation. Rule 159(5) entitles the person whose property is attached to file objections and to an opportunity of being heard; the Commissioner hearing such objections must pass a reasoned order accepting or rejecting them. The impugned orders of attachment and the order rejecting the petitioner's objections contained no reasons and therefore demonstrated non-application of mind contrary to the requirements recognised by the Supreme Court in Radha Krishan Industries [2021 (4) TMI 837 - SUPREME COURT ] and by this Court in Originative Trading [2022 (3) TMI 262 - BOMBAY HIGH COURT ] In these circumstances the attachments could not stand. The Court did not decide the correctness of the underlying demand but confined its review to the procedural defect of failing to record reasons and to deal with the petitioner's detailed submissions before maintaining the attachments. [Paras 14, 15] Impugned attachment orders quashed and set aside; proceedings remitted to respondent No.3 to afford hearing and pass a reasoned order under Section 83 read with Rule 159. Final Conclusion: The attachment orders were quashed for failure to record reasons and to deal with the petitioner's objections; the matter is remitted to the Commissioner for fresh decision after affording an opportunity of hearing and passing a reasoned order under Section 83/Rule 159. The court expressed no opinion on the pre-show cause notice under Section 74. Issues: (i) Whether the provisional attachment orders in form GST DRC-22 attaching the petitioner's bank accounts under Section 83 of the Maharashtra Goods and Services Tax Act, 2017 are valid where the orders and the order rejecting objections do not record reasons and whether fresh proceedings are required.Analysis: The issue requires examination of the statutory scheme governing provisional attachment and the post-attachment objection procedure, including the requirement that an opinion be formed that attachment is necessary to protect revenue and that the person whose property is attached be afforded an opportunity to object and be heard. The procedural safeguards include the Commissioner recording the basis for formation of opinion and the Commissioner passing a reasoned order dealing with objections. The permissibility of provisional attachment is circumscribed by the need to avoid routine or mechanical exercise of the power; where objections are filed and a personal hearing is granted, the authority must address those objections by dealing with the substance and recording reasons for acceptance or rejection.Conclusion: The provisional attachment orders dated 3 December 2025 and 9 January 2026 are quashed and set aside, and the proceedings under Section 83 are remanded for the authority to grant opportunity of hearing and to pass a reasoned order in accordance with law.Ratio Decidendi: Provisional attachment under Section 83 must be preceded by formation of an opinion connected to protecting revenue, and where objections are filed the authority must afford a hearing and pass a reasoned order addressing the objections; absence of recorded reasons or mechanical exercise of the attachment power renders the attachment invalid.