Sl Golden Paptech PVT. LTD. vs. The Principal Additional Director General, Dggi (Dzu)

Held

The Court held that the provisional attachment orders were issued prematurely. It noted that a Show Cause Notice (SCN) had not yet been issued to the Petitioner, and the demand had not been quantified. The Court acknowledged the Petitioner's submission of Rs. 2 crores and the provisional attachment of their properties. Considering the Petitioner's need for liquidity for day-to-day business operations, the Court permitted the Petitioner to operate its bank account, subject to maintaining a minimum balance of Rs. 50 lakhs. This permission was made conditional upon the issuance of an SCN and further adjudication. The Court also stated that if any other demand arose, the Department was free to approach the Court for modification. The ratio decidendi is that provisional attachment orders should not be issued without a proper SCN and quantification of demand, especially when the assessee has already provided substantial security and requires funds for business continuity.

Facts

The Petitioner, SL Golden Paptech Pvt. Ltd., challenged provisional attachment orders dated March 28, 2025, and April 11, 2025, issued by the Principal Additional Director General, DGGI (DZU), which attached its bank accounts and properties. The Respondent (Revenue) contended that the Petitioner's total liability, including tax, penalty, and interest, was approximately Rs. 17.92 crores, with tax and penalty each amounting to Rs. 8.96 crores. They also alleged evasion of GST, citing the unavailability of data for three financial years (2020-23) during a search. The Petitioner countered by stating they had already deposited Rs. 2 crores and that the Department had attached specific immovable properties. The Petitioner also informed the Court that their attached bank account held approximately Rs. 1.2 crores and sought liquidity for business operations.

Key Issues

1. Whether the provisional attachment of the Petitioner's bank accounts and properties is justified in light of the stage of proceedings, specifically the absence of a Show Cause Notice (SCN) and quantified demand? (Question of law). The Petitioner argued that the attachment was premature as no SCN had been issued and the demand was not finalized. They emphasized the substantial deposit of Rs. 2 crores and the attachment of properties, which they claimed were unencumbered, and highlighted the need for liquidity for business operations. The Respondent argued that the Petitioner's total liability was substantial (Rs. 17.92 crores), including tax and penalty, and that the Petitioner was involved in GST evasion, evidenced by missing financial data for three years. They contended that the attachment was necessary to safeguard revenue.