Case Law Details
Shri Petro Chemical Mercantile Pvt. Ltd. Vs Union of India And 5 Ors (Gauhati High Court)
The petitioner challenged the provisional attachment of its bank account under Section 83 of the Central Goods and Services Tax Act, 2017, imposed through an Attachment Order dated 27.02.2026. The petitioner contended that the order had been issued mechanically without complying with the statutory requirement of forming an opinion that such attachment was necessary to protect the interest of government revenue. It argued that the attachment order merely stated that it was passed to protect revenue by exercising powers under Section 83, without demonstrating the mandatory formation of opinion.
The petitioner relied on the Supreme Court’s decision in Radha Krishan Industries Vs. State of Himachal Pradesh & Ors., which held that the power under Section 83 is draconian in nature and can be exercised only after strict compliance with the statutory conditions, including the formation of an opinion by the competent authority. The petitioner also submitted that the freezing of its bank account had caused severe hardship, preventing it from paying salaries and other dues to its employees.
The respondent bank stated that it had no instructions in the matter. Counsel representing the Union of India submitted that the Union had no role in the issue involved. No one appeared on behalf of the authorities that had issued the attachment order.
After examining the records, the Gauhati High Court found that the impugned attachment order did not disclose that the competent authority had formed the mandatory opinion before directing provisional attachment. The order only recorded that the attachment was made to protect the interest of revenue under Section 83 of the Act.
Referring to the principles laid down by the Supreme Court in Radha Krishan Industries, the High Court observed that Section 83 requires strict compliance with several statutory conditions before a provisional attachment can be made. These include the formation of an opinion by the Commissioner, the necessity of such attachment to protect government revenue, the issuance of a written order, and compliance with the applicable rules governing attachment. The Court noted that the validity of such an exercise of power depends upon strict observance of these mandatory preconditions.
The High Court held that, in the present case, the attachment order had been issued mechanically without any material indicating that the competent authority had formed the required opinion. Consequently, the Court concluded that the mandatory procedure prescribed under Section 83 had not been followed.
Accordingly, the High Court held that the Attachment Order dated 27.02.2026 (digitally signed on 26.02.2026) was not sustainable in law and set it aside. The respondent bank was directed to de-freeze the petitioner’s bank account. The writ petition was allowed and disposed of with these directions.
FULL TEXT OF THE JUDGMENT/ORDER OF GAUHATI HIGH COURT
Heard Dr. A. Saraf, learned Senior Counsel through RVC assisted by Mr. M. Solo, learned counsel for the petitioner. Also heard Mr. C. Phom, learned counsel appearing on behalf of Mr. Yangerwati, learned C.G.C., who represents the respondent No. 1 and Mr. Thepfukedo, learned counsel appearing for the respondent Nos. 5 & 6.
2.The learned Senior Counsel submits that the petitioner is aggrieved with the Provisional Attachment of its property (Bank Account) under Section 83 of the Central Goods and Services Tax Act, 2017 (Act of 2017), vide the impugned Attachment Order dated 27.02.2026 (Annexure – V). Referring to the said Attachment Order, the learned Senior Counsel submits that the same has been issued by the respondent No. 3 in a mechanical manner and not in terms of what has been prescribed by Section 83 of the Act of 2017. The learned Senior Counsel submits that it is mandated under the said provision that attachment has to be preceded by formation of an opinion for the purpose of protecting the interest of the Government revenue but on perusal of the impugned Attachment Order, it merely says that the attachment is directed to protect the interest of the revenue by exercising the power under Section 83 of the Act of 2017.
3. The learned Senior Counsel, submits that law in this regard is no longer res integra, in view of the fact that the Hon’ble Apex Court in Radha Krishan Industries Vs. State of Himachal Pradesh & Ors., reported in AIR 2021 SC 2114 has held in clear terms that the law under Section 83 of the Act of 2017 being draconian in nature, the requirement of the competent authority to form an opinion prior to invoking the said provision is mandatory. The same is necessary in view of the fact that exercise of unguided discretion would leave the citizens and their legitimate business activities to the peril of arbitrary power. Therefore, the ingredients provided under Section 83 of the Act of 2017 must be strictly applied before a provisional attachment on the property of an assessee can be levied.
4. The learned Senior Counsel has referred to paragraph Nos. 48, 49 & 50 and the conclusion of the Hon’ble Apex Court at Paragraph No. 72 of the said Judgment in particular, to support his submission.
5. The learned Senior Counsel appearing for the respondent Bank i.e., Punjab & Sind Bank, Dimapur Branch submits that he has no instructions from the Bank in this regard.
6. Similarly, the learned counsel appearing on behalf of the learned C.G.C., who represents the respondent No. 1 and also submits that the respondent Union of India, considering the issue involved has no say in the matter.
7. None appears for the respondent Nos. 2, 3 & 4, although they were represented on earlier occasions by Mr. S. C. Keyal or Mr. K. Jain.
8. Dr. A. Saraf, learned Senior Counsel submits that in view of the fact Attachment Order of the bank account of the petitioner, the petitioner is suffering great hardship as the employees employed by it cannot be paid their salary or their dues. Therefore, the impugned Attachment Order being in clear violation of the expressed provisions provided by Section 83 of the Act of 2017 and the decision rendered by the Hon’ble Apex Court in Radha Krishan Industries (supra), the same may be set aside.
9. I have heard the learned counsels and also perused the materials available on record.
10. A perusal of the impugned Attachment Order of the bank account of the petitioner does not show that the Competent Authority had formed an opinion before directing a provisional attachment of the bank account. All that it says that in order to protect the interest of revenue and as provided by the powers conferred under Section 83 of the Act of 2017, the bank account of the petitioner is provisionally attached. The Hon’ble Apex Court in Radha Krishan Industries (supra) in the given facts of that case held that an attachment which is contemplated in Section 83 of the Act of 2017 is at a stage which is anterior to the finalization of an assessment or raising of a demand. The legislature having being conscious of the nature of the power to be draconian and the serious consequences which emanate from the attachment of any property including a bank account of the taxable person, therefore, specifically provided certain conditions to invoke the said power. Firstly, the language of the statute indicates the necessity of formation an opinion by the Commissioner; secondly, the formation of an opinion before ordering a provisional attachment; thirdly, the existence of an opinion that it is necessary to do so for the purpose of protecting the interest of the government revenue; fourthly, the issuance of an order in writing for the attachment of any property of the taxable person; and fifthly, the observance of the Commissioner of the provisions contained in the Rules in regard to the manner of attachment. The Hon’ble Apex Court further went on to observe that when the exercise of the power is challenged, the validity of its exercise will depend on a strict and punctilious observance of the statutory preconditions by the Commissioner. Having found, the same to be absent, in the given facts and circumstances of the case, the impugned Attachment Order was set aside by the Hon’ble Apex Court.
11. In the present case, from a perusal of the impugned Attachment Order and particularly, in absence of any material available to the contrary, it can be seen that the impugned order has been passed in a mechanical manner without there being any formation of opinion by citing that the requirement was to protect the interest of the revenue and the authority was empowered to do so under Section 83 of the Act of 2017. The same in the considered view of this Court, in view of the decision rendered by the Hon’ble Apex Court, runs short of the required or the mandatory procedure prescribed of forming an opinion prior to issuance of such an Attachment Order.
12. Accordingly, this Court of the view that the impugned Attachment Order dated 27.02.2026 which was digitally signed on 26.02.2026 (Annexure – V) is not sustainable in law, accordingly, the same is set aside. Consequently, upon setting aside of the impugned Attachment Order the respondent Bank, i.e., respondent Nos. 5 & 6 are directed to de-freeze the bank account of the petitioner.
13. With the above observations and directions, the writ petition stands disposed of as allowed.
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