In the case of Patran Steel Rolling Mill vs. Assistant Commissioner of State Tax, Unit 2, (2019) 101 taxmann.com 80 (Gujarat), the Gujarat High Court has held that, while exercising the powers u/s 83 of the CGST Act, 2017(i.e. Provisional attachment of an property or bank account of the taxable person to protect the interest of the revenue in certain cases) the concerned authorities should ensure that while the interest of the revenue is safeguarded, the dealer is also in a position to continue with his business, because only then the dealer could continue with its business to generate more revenue.

In the present case, the Assistant Commissioner in the course of conducting physical verification of the stock of raw material and finished goods with recorded quantity of the same at the premises of the petitioner, has found that physical goods were in excess in the factory as compared to the recorded quantity. Further, the petitioner had appropriately paid off the tax liability as calculated by the Commissioner on the date when the search was conducted. Thereafter, the Commissioner had seized the goods which were found in excess in the factory premises and also attached the bank accounts of the petitioner. Due to this action, the petitioner was not in a position to carry on its day to day business and make payment of statutory dues like GST, income tax, local taxes etc.

The High Court while taking action u/s 83 or 67(2) of the CGST Act, the Commissioner should consider the background and history of the dealer and also his financial position to ascertain as to whether or not he would otherwise be in a position to pay the dues that may be assessed upon the culmination of any assessment proceedings that may be initiated. Further, such drastic powers u/s 83 of the Act, should not be exercised as a matter of course, but only after due application of mind to the relevant factors. As, in the present case, the petitioner had already paid the tax dues, so there is no reason to believe that the petitioner would not pay its tax dues after proper assessment is carried out and hence there was no warrant for passing the attachment order.