M/S R.B. Drillers And Construction vs. State Of Chhattisgarh

Facts

The petitioner, M/s R.B. Drillers And Construction, filed a writ petition challenging an order dated 21.03.2025 issued by Respondent No. 1 (State Tax Department). The petitioner had performed work for Respondent No. 2 (Directorate of Jal Jeevan Mission) and was awaiting payment. Following a raid on the petitioner's office on 24.12.2024, Respondent No. 1 initiated proceedings under Section 74 of the Central Goods and Services Tax Act, 2017, and attached the petitioner's bank account. The impugned order directed Respondent No. 2 not to disburse any payment to the petitioner for the work done. The petitioner argued that the attachment of payment was arbitrary and violated principles of natural justice, citing the Supreme Court's decision in Radha Krishan Industries.

Held

The Court allowed the writ petition, quashing the impugned notice dated 21.03.2025. The Court found that the GST Department had issued notices without mentioning relevant provisions or showing grounds for attachment. Specifically, the impugned notice (Annexure-P/1) did not specify the provision under which it was issued or the reason for attaching the amount payable to the petitioner by Respondent No. 2. Relying on the Supreme Court's judgment in Radha Krishan Industries, the Court emphasized that before levying a provisional attachment, there must be a formation of opinion that it is necessary for protecting government revenue. The Court noted that no such reason was assigned by Respondent No. 1 prior to issuing the impugned notice. Therefore, the notice was found to be against the observations of the Supreme Court. The Court granted liberty to Respondent No. 1 to take steps in accordance with law for stopping payment if advised. No issue was expressly left undecided.

Key Issues

1. Whether the impugned order dated 21.03.2025, directing Respondent No. 2 not to pay the petitioner, is illegal, arbitrary, and in violation of the petitioner's fundamental and constitutional rights and principles of natural justice, particularly in light of the Supreme Court's ruling in Radha Krishan Industries vs. State of Himachal Pradesh & Others, and whether it was issued without proper formation of opinion and justification as required by law. Petitioner's Arguments: The petitioner contended that the provisional attachment of payment was draconian and required a prior formation of opinion by the authority, which was absent. They argued that the impugned order lacked reasons and was issued without adhering to the principles laid down by the Supreme Court in Radha Krishan Industries, which emphasized the necessity of forming an opinion for protecting government revenue before such attachment. The petitioner sought quashing of the order and disbursement of payments. Revenue/State's Arguments: The State/Respondents argued that proceedings under Section 74 of the Act, 2017, had been initiated. They stated that an initial evasion of approximately Rs. 2 crores was found, which later escalated to an evasion of about Rs. 13 crores GST. Based on this, they contended that the petition was liable to be rejected.