Facts of the Case:
In this case, the petitioner challenged orders passed under Section 83 whereby its bank accounts held with HDFC Bank were provisionally attached. The petitioner also challenged the order passed under Rule 159 of the MGST Rules rejecting its objections and maintaining the attachment, as well as a pre-show cause intimation issued under Section 74. The department initiated investigation under Section 67 in June 2025, alleging non-payment of GST on construction services allegedly supplied to existing members and MHADA. Also, a pre-SCN intimation dated 26 August 2025 quantified a proposed liability of ₹42.68 crores on the premise that handing over redeveloped flats without consideration constituted taxable supply.
Despite detailed replies and objections filed by the petitioner, respondent authorities provisionally attached the petitioner’s bank accounts. The petitioner contended that the attachment orders were passed mechanically, without reasons, without proper formation of opinion, and in violation of statutory safeguards under Section 83 read with Rule 159.
Reliance was placed on the Supreme Court’s decision in Radha Krishan Industries v. State of Himachal Pradesh, which held that provisional attachment is a draconian power requiring strict compliance with statutory preconditions and a reasoned order. The petitioner also relied on the Bombay High Court’s decision in Originative Trading Pvt. Ltd. v. Union of India, reiterating the necessity of due application of mind and adherence to procedural safeguards.
Issue:
Whether the provisional attachment of the petitioner’s bank accounts under Section 83 of the MGST Act, and the order rejecting objections under Rule 159(5), were valid in law when the orders did not record reasons or demonstrate proper application of mind.
Held that:
The Court held that the principles laid down in Radha Krishan Industries and Originative Trading Pvt. Ltd. squarely applied. It observed that neither the provisional attachment orders nor the order rejecting objections contained any reasons whatsoever. This was particularly significant since the petitioner had filed detailed objections challenging the very taxability of the alleged transaction.
The Court emphasized that under Rule 159(5), the Commissioner is required to consider objections and pass a reasoned order. Failure to record reasons defeats judicial scrutiny and violates statutory safeguards governing the exercise of such extraordinary powers.
Accordingly, the impugned attachment orders were quashed and set aside. The matter was remanded to the authority for fresh consideration under Section 83 after granting an opportunity of hearing and passing a reasoned order in accordance with law.
Case Name: Bajaj International Realty Private Limited Versus The State of Maharashtra, The Commissioner of State Tax, The Joint Commissioner of State Tax, The Assistant Commissioner of State Tax, HDFC Bank, Mumbai. dated 26.02.2026
To read the complete judgement 2026 Taxo.online 503
