A provisional attachment notice is invalid if it fails to state the legal provision under which it is issued and the reasons for the attachment.

Issue

Is a provisional attachment of a bank account and receivables under Section 83 of the CGST Act legally valid if the notice for such attachment is issued without mentioning the specific statutory provision or the recorded reasons that are necessary to justify such a drastic measure?

Facts

The petitioner, a contractor, was awaiting payments from a government department (Respondent 2) for work done under the Jal Jeevan Mission.
The GST department (Respondent 1) conducted a raid on the petitioner’s office and initiated proceedings under Section 74, alleging tax evasion.
The department then issued a notice to provisionally attach the petitioner’s bank account and also directed Respondent 2 not to release the payments owed to the petitioner.
The petitioner challenged this notice in the High Court, arguing it was fatally flawed because it did not mention the legal provision (Section 83) under which it was issued, nor did it contain any recorded opinion or reasons for the attachment.

Decision

The High Court quashed the impugned notice, thereby lifting the attachment.
It strongly deprecated the practice of issuing such notices without a clear statutory basis and recorded grounds.
The court held that the action was a direct violation of the principles laid down by the Supreme Court in the Radha Krishan Industries case, which mandates that the power of provisional attachment must be backed by a properly formed opinion and recorded reasons before the notice is issued.
Since the notice was devoid of any reasons, it was deemed arbitrary, illegal, and unsustainable in law.

Key Takeaways

Reasons are Non-Negotiable: The power of provisional attachment under Section 83 is a drastic one and cannot be exercised mechanically. The officer must form a reasoned opinion that such an action is necessary to protect the interest of the revenue, and these reasons must be recorded in writing.
Mentioning the Law is Mandatory: Any notice that affects a taxpayer’s rights must clearly state the legal provision under which the action is being taken. A vague notice is legally unenforceable.
Attachment is an Exception, Not the Rule: The Supreme Court’s guidelines in Radha Krishan Industries must be strictly followed. This means attachment should only be used in exceptional circumstances and with full procedural compliance.
Procedural Safeguards are Jurisdictional: The requirement to record reasons is not a mere formality but a jurisdictional prerequisite. Its absence renders the entire attachment proceeding void from the start.

HIGH COURT OF CHHATTISGARH

R.B. Drillers And Construction

State of Chhattisgarh

Naresh Kumar Chandravanshi, J.

WPT No. 141 of 2025

SEPTEMBER 24, 2025

Raza Ali, Adv. for the Petitioner. Dilman Rati Minj, Govt. Adv. and Ms. Anuradha Jain, Panel Lawyer for the Respondent.

JUDGMENT

1. Heard.

2. This petition has been preferred by the petitioner seeking following reliefs:-

“A. A writ and/or an order in the nature of appropriate writ do issue commanding and directing the respondent authorities to produce before this Hon’ble Court all the relevant records pertaining to the case of the petitioner. B. A writ and/or an order in the nature of writ of appropriate nature do issue quashing the impugned letter/order dated 21.03.2025 as being illegal, arbitrary, without any authority of law and in violation of fundamental and constitutional rights of the petitioner and also in violation of principle of natural justice.”

C. A writ and/or an order in the nature of writ of appropriate nature do issue to the respondent No.2 to disburse the payments of the work done by the petitioner.

D. Any other relief which this Hon’ble Court may deem fit in the facts and circumstances of the case.

E. Cost of the petition may also be awarded.”

3. Learned counsel for the petitioner would submit that in pursuance of the work order issued by respondent No.2, the petitioner performed various work like drilling of borewell and installation of pipe etc., to which, an amount is yet to be paid by respondent No.2. On 24.12.2024, respondent No.1 conducted raid in the office of petitioner and they prepared some documents, subsequently, they initiated proceeding under Section 74 of the Chapter 15 of the Central Goods and Services Tax Act, 2017 (henceforth referred to as “the Act, 2017”). He would further submit that respondent No.1 has already attached bank account of petitioner. He further submitted that despite attachment of bank account, vide impugned order dated 21.03.2025 (Annexure-P/1), respondent No.1 directed respondent No.2 not to pay any amount to the petitioner of tender work done by it in Jal Jeevan Mission. He next submitted that the Hon’ble Apex Court in the case of Radha Krishan Industries v. State of Himachal Pradesh 26/86 GST 665/48 GSTL 113 (SC)/(2021) 6 SCC 771 has held that, the power to levy a provisional attachment is draconian in nature, therefore, there must be a formation of opinion before doing so. But, without mentioning any reason for opinion for attachment of payment payable to petitioner by respondent No.2, respondent No.1 has passed the impugned order Annexure -P/1, therefore, he prays that it may be set aside.

4. Per contra, learned counsel appearing for State/respondents referring to its reply would submit that proceeding under Section 74 of the Chapter 15 of the Act, 2017 has been initiated. She would further submit that primarily it has been found that the petitioner has evaded about Rs.2 crores. She further submitted that subsequently it is also revealed that he has evaded about Rs.13 crores GST, hence, this petition is liable to be rejected.

5. I have heard learned counsel for the parties and perused the material available on record.

6. It is sorry state of affairs that GST Department issued notices, but neither they mentioned relevant provisions nor showed any ground to do so. Perusal of notice (Annexure-P/1) also does not show that it has been issued under which provision and what is the reason to attach amount payable by respondent No.2 to the petitioner. In the case of Radha Krishan Industries (supra), while dealing with the provisions of Section 83 of the Act, 2017, the Hon’ble Supreme Court has observed in para Nos.49 and 50 as under:-

“49. Now in this backdrop, it becomes necessary to emphasise that before the Commissioner can levy a provisional attachment, there must be a formation of “the opinion” and that it is necessary “so to do” for the purpose of protecting the interest of the government revenue. The power to levy a provisional attachment is draconian in nature. By the exercise of the power, a property belonging to the taxable person may be attached, including a bank account. The attachment is provisional and the statute has contemplated an attachment during the pendency of the proceedings under the stipulated statutory provisions noticed earlier. An attachment which is contemplated in Section 83 is, in other words, at a stage which is anterior to the finalisation of an assessment or the raising of a demand. Conscious as the legislature was of the draconian nature of the power and the serious consequences which emanate from the attachment of any property including a bank account of the taxable person, it conditioned the exercise of the power by employing specific statutory language which conditions the exercise of the power. The language of the statute indicates first, the necessity of the formation of opinion by the Commissioner, second, the formation of opinion before ordering a provisional attachment; third the existence of opinion that it is necessary so to do for the purpose of protecting the interest of the government revenue; fourth, the issuance of an order in writing for the attachment of any property of the taxable person; and fifth, the observance by the Commissioner of the provisions contained in the rules in regard to the manner of attachment. Each of these components of the statute are integral to a valid exercise of power. In other words, 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. While conditioning the exercise of the power on the formation of an opinion by the Commissioner that “for the purpose of protecting the interest of the government revenue, it is necessary so to do”, it is evident that the statute has not left the formation of opinion to protecting the interest of the government revenue.

50. By utilising the expression “it is necessary so to do the legislature has evinced an intent that an attachment is authorised not merely because it is expedient to do so (or profitable or practicable for the Revenue to do so) but because it is necessary to do so in order to protect interest of the government revenue. Necessity postulates that the interest of the Revenue can be protected only by a provisional attachment without which the interest of the Revenue would stand defeated. Necessity in other words postulates a more stringent requirement than a mere expediency. A provisional attachment under Section 83 is contemplated during the pendency of certain proceedings, meaning thereby that a final demand or liability is yet to be crystallised. An anticipatory attachment of this nature must strictly conform to the requirements, both substantive and procedural, embodied in the statute and the rules. The exercise of unguided discretion cannot be permissible because it will leave citizens and their legitimate business activities to the peril of arbitrary power. Each of these ingredients must be strictly applied before a provisional attachment on the property of an assessee can be levied. The Commissioner must be alive to the fact that such provisions are not intended to authorise Commissioners to make pre-emptive strikes on the property of the assessee, merely because property is available for being attached. There must be a valid formation of the opinion that a provisional attachment is necessary for the purpose of protecting the interest of the government revenue.”

7. Having considered the law laid down by Hon’ble Apex Court, if facts of the instant case are examined, it is found that prior to issuance of impugned notice, no reason has been assigned by respondent No.1, as to why provisional attachment of amount payable to the petitioner by respondent No.2 is necessary. Aforesaid impugned notice is found to be against the observation made by Hon’ble Apex Court, therefore, I feel inclined to allow the instant petition. Consequently, this Writ Petition (T) is allowed. The impugned notice dated 21.03.2025 (Annexure-P/1) is quashed.

8. However, liberty is left with the respondent No.1 to take steps in accordance with law for stoppage of payment of amount in question payable to the petitioner by respondent No.2, if so advised.

9. Parties shall bear their own cost(s).