HC Quashes Bank Account Attachment for Lack of Valid Section 74 Proceedings

Case Details: Soraza Recycling (P.) Ltd. vs. Union of India - [2025] 179 taxmann.com 104 (Allahabad)

Judiciary and Counsel Details

• Shekhar B. Saraf & Praveen Kumar Giri, JJ.
• Nishant Mishra & Vedika Nath for the Petitioner.
• Dhananjay Awasthi, Krishna Agarawal, Krishna Mohan Asthana, Saumitra Singh & Maneesh Mehrotra for the Respondent.

Facts of the Case

The petitioner, a registered taxpayer under the CGST Act, challenged the provisional attachment of its bank accounts under Section 83 of CGST Act. The attachment was imposed solely on the basis of an assertion that proceedings under Section 74 of CGST Act had been initiated, despite no formal initiation of such proceedings or presentation of tangible material. It was contended that the attachment lacked a reasoned opinion and any direct connection to material facts justifying the protection of government revenue. The matter was accordingly brought before the High Court.

High Court Held

The High Court held that Section 83 of the CGST Act requires a reasoned opinion supported by tangible evidence before provisional attachment can be ordered to protect government revenue. It was observed that the attachment notices contained only unsupported assertions about proceedings under Section 74, without any formal initiation or substantiated reasons. It was concluded that the attachments were arbitrary, perverse, and lacked legal foundation. Thus, the provisional attachment notices and directed the release of the bank accounts were quashed, while granting the Department of Revenue liberty to initiate fresh proceedings.

List of Cases Referred to

• Radha Krishan Industries v. State of Himachal Pradesh [2021] 127 taxmann.com 26/86 GST 665/48 GSTL 113 (SC) (para 8)
• R D Enterprises v. Union of India [2024] 168 taxmann.com 511 (Allahabad) (para 9).