Facts of the Case:

In this case, the petitioner challenged the legality of provisional attachment orders issued under Section 83, whereby its bank accounts were attached. These attachment orders were preceded by a communication in Form GST DRC-23 issued on the very same day. The petitioner contended that both the pre-intimation and the attachment orders failed to disclose any formation of opinion by the competent authority regarding the necessity of such attachment for protecting the interest of revenue.

It was further argued that the attachment was carried out in a mechanical and arbitrary manner without adhering to statutory safeguards and principles laid down by the Supreme Court in Radha Krishan Industries v. State of Himachal Pradesh. The petitioner also submitted that despite filing a detailed objection and even offering alternate security, the department neither considered the same nor responded, thereby continuing the coercive attachment for several months, severely impacting its business operations.

Issue:

Whether provisional attachment of bank accounts under Section 83 of the CGST Act is valid when no opinion is formed by the competent authority based on tangible material; the statutory requirement of necessity to protect revenue is not demonstrated.

Held That:

The Court observed that the power of provisional attachment is draconian in nature and can be exercised only upon strict compliance with statutory preconditions, including formation of a reasoned opinion based on tangible material demonstrating necessity to protect revenue. In the present case, neither the pre-intimation nor the attachment orders disclosed any such satisfaction, rendering the action arbitrary and legally untenable.

The Court further noted that the authority had acted in a high-handed manner by issuing both the pre-intimation and attachment orders on the same day, thereby defeating the purpose of procedural safeguards. The failure to consider the petitioner’s objections and alternate security, coupled with the absence of any written order reflecting application of mind, amounted to a serious breach of natural justice and statutory discipline. The continued attachment caused grave prejudice by paralysing the petitioner’s business, infringing its constitutional rights.

The Court held that the impugned provisional attachment orders were wholly unsustainable in law, as they were passed in blatant violation of the mandatory requirements of Section 83 of the CGST Act and the principles laid down by the Supreme Court. The impugned attachment orders quashed and held them to be an abuse of power.

Case Name: Nivara Infradevelopers LLP, through Designated Partner Mr. Nilesh Patil Versus The Union of India, The State of Maharashtra, The Commissioner of State Tax Mumbai, Joint Commissioner of State Tax, Investigation Mumbai, Assistant Commissioner of State Tax, Mumbai. dated 02.04.2026