Nirajkumar Nareshkumar Lakhyani (Pro. Of M/S Om Multitrade) vs. State Of Gujarat

Held

The Court held that the provisional attachment of the petitioner's bank account was to be set aside. The reasoning was based on the petitioner's undertaking to pay the disputed tax liability of Rs. 2,13,04,290/- in 15 equal monthly installments, commencing from May 2023. The Court noted that the petitioner was making this payment without prejudice to his rights and contentions in any future adjudication proceedings. The Court explicitly stated that it had not gone into the merits of the case of either party. The operative direction was to set aside the order of attachment dated 30.11.2022 and lift the attachment forthwith. The rights and contentions of both sides were left open for future proceedings. No issue was expressly left undecided.

Facts

The petitioner, Nirajkumar Nareshkumar Lakhyani, proprietor of M/s Om Multitrade, filed a writ petition under Article 226 of the Constitution challenging an order dated 30.11.2022 by which his bank account with YES Bank Limited was provisionally attached. The attachment was made after officers visited his business premises on 29.11.2022, found them closed, and subsequently issued summons under Section 70(1) of the CGST Act and GGST Act on 30.11.2022. The petitioner sought to set aside the attachment and, by way of interim prayer, requested permission to pay the outstanding tax amount of Rs. 2,13,04,290/- in installments. The petitioner later agreed to pay the disputed amount in 15 equal monthly installments, commencing from May 2023, without prejudice to his rights in future adjudication proceedings.

Key Issues

1. Whether the provisional attachment of the petitioner's bank account under Section 70(1) of the Central Goods and Services Tax Act, 2017, and Section 70(1) of the Gujarat Goods and Services Tax Act, 2017, is justified in the absence of pending adjudication proceedings. Petitioner's contention: The petitioner argued that the attachment was made without any adjudication proceedings having been initiated or finalized. The amount sought to be recovered was an "unascertained and proposed so-called liability" which had not been crystallized into a statutory liability. The petitioner was willing to pay the disputed amount in installments, and therefore, the attachment was excessive and unjustified. Revenue's contention: The revenue contended that summons were issued under Section 70(1) of the respective GST Acts, indicating an inquiry into the petitioner's tax affairs. The provisional attachment was a measure taken to safeguard potential revenue, and the petitioner's willingness to pay in installments was a subsequent development. The judgment does not explicitly record the revenue's specific arguments against the petitioner's claim regarding the absence of adjudication proceedings.