M/S. Shubh Corporation A Partnership Firm vs. State Of Maharashtra Thr. Agp Office High Court And Ors

Facts

M/s. Shubh Corporation (Petitioner) filed a writ petition challenging an order dated January 27, 2025, issued by the Joint Commissioner of State Tax (Respondent No. 2), attaching its bank account. The attachment was made under Section 83 of the Maharashtra Goods and Services Tax Act, 2017 (MGST Act), to protect government revenue. The Petitioner stated that its business involves procuring and exporting heavy machinery, and it is a registered GST assessee. Officers of Respondent No. 2 conducted a search under Section 67 of the MGST Act on October 16, 2024, at the Petitioner's premises. The Petitioner claims to have cooperated and provided all relevant documents. Following the search, no summons were issued, and no further correspondence occurred until the attachment order. The Petitioner represented to Respondent No. 2 on February 3, 2025, requesting the reasons for the attachment and the material relied upon, which were not provided. No show-cause notice had been issued.

Held

The Court held that the impugned order of provisional attachment was unsustainable and liable to be set aside. The Court noted that Section 83(1) of the MGST Act requires the Commissioner to form an opinion, based on material, that attachment is necessary to protect government revenue. The Court found that the impugned order did not set out any material forming the basis of the Commissioner's opinion. Furthermore, the proceedings under Section 67 had concluded, and no determination of tax or show-cause notice had been issued. The Court emphasized that the power of attachment is drastic and must be exercised with circumspection. The Court was supported by the Supreme Court's decision in Radha Krishan Industries. Consequently, the Court quashed and set aside the attachment order and permitted the Petitioner to operate its bank account. The Court clarified that this decision did not opine on the merits of any potential tax claim by the department and did not preclude the department from issuing a show-cause notice.

Key Issues

1. Whether the provisional attachment of the Petitioner's bank account under Section 83 of the MGST Act was valid, considering the absence of a "reason to believe" based on material, and the conclusion of proceedings under Section 67 without any determination of tax liability or issuance of a show-cause notice? Petitioner's arguments: The Petitioner contended that the attachment was arbitrary and without basis. They argued that the proceedings under Section 67 had concluded, no tax demand had been determined, and no show-cause notice was issued. They asserted that the attachment order lacked the necessary "reason to believe" that revenue was at risk, and the material forming the basis of the Commissioner's opinion was not provided. They relied on the Supreme Court's decision in Radha Krishan Industries Vs. State of Himachal Pradesh & Ors. Revenue's arguments: The judgment does not record any specific arguments made by the Respondent – State.