Allahabad High Court Quashes Provisional Attachment Orders Against Soraza Recycling Pvt. Ltd.
Court Criticizes Lack of Reasoning in Provisional Attachment Under CGST Act, Calls for Adequate Grounds and Tangible Material
In a significant judgment, the Allahabad High Court has quashed provisional attachment orders issued against M/s Soraza Recycling Private Limited, citing a lack of valid reasoning and tangible material. The Division Bench, comprising Justices Shekhar B. Saraf and Praveen Kumar Giri, delivered the verdict on September 22, 2025, in a writ petition filed by the company challenging the attachment of its bank accounts under Section 83 of the Central Goods and Services Tax Act, 2017.
The court scrutinized the provisional attachment notices issued by the Commissioner of CGST, Noida, which were based solely on the initiation of proceedings under Section 74 of the Act. The bench highlighted that the attachment should only serve the purpose of protecting government revenue and must be supported by a proper opinion grounded in specific reasons and cogent material. The absence of such reasons renders the attachment arbitrary and illegal.
The judgment underscored the draconian nature of provisional attachments and emphasized the need for their execution to be based on tangible material with a live nexus to the necessity of the attachment. The court referred to the Supreme Court's ruling in Radha Krishan Industries v. State of H.P., reinforcing that unguided discretion cannot justify such actions.
The bench criticized the attachment notice for failing to provide any specific reasons or tangible material justifying the necessity of the attachment. It noted that the proceedings under Section 74 had not even commenced, making the attachment unjustifiable. The court ordered the release of the provisional attachments within 48 hours and directed the authorities to consider the company's reply regarding the blocking of its electronic credit ledger, providing a personal hearing and passing a reasoned order within two weeks.
This decision reiterates the judiciary's stance on the importance of adhering to statutory requirements in tax-related actions and ensuring the protection of citizens' rights against arbitrary measures.
Bottom Line:
Provisional attachment under Section 83 of the Central Goods and Services Tax Act, 2017, is a draconian measure and must be exercised only upon formation of a valid opinion based on tangible material and adequate reasoning. Lack of proper reasoning renders such attachment arbitrary and illegal.
Statutory provision(s): Central Goods and Services Tax Act, 2017 - Section 83
