Case Note & Summary
The petitioner, Prasanna Karunakar Shetty, filed a writ petition under Article 226 of the Constitution of India before the Bombay High Court challenging an order of provisional attachment dated 11 January 2024 passed by the State Tax Officer under Section 83 of the Maharashtra Goods and Services Tax Act, 2017 (MGST Act). The attachment order was issued without any prior notice or opportunity of hearing to the petitioner. The petitioner contended that the order was arbitrary and violative of principles of natural justice. The respondents, including the State of Maharashtra and the Commissioner of State Tax, argued that the power under Section 83 is preventive and can be exercised without notice to protect revenue. The Court, after hearing both sides, held that the power of provisional attachment under Section 83 is drastic and can only be exercised after complying with the principles of natural justice. The Court observed that Section 83 does not expressly exclude the requirement of a hearing, and therefore, a show-cause notice must be issued before passing such an order. The impugned attachment order was quashed and set aside, and the respondents were directed to release the attached bank accounts. The Court also clarified that this order does not preclude the respondents from initiating fresh proceedings in accordance with law after giving due notice and hearing to the petitioner.
Headnote
A) Constitutional Law - Writ Jurisdiction - Article 226 of the Constitution of India - Certiorari - The petitioner sought quashing of an attachment order passed under Section 83 of the MGST Act without affording any prior notice or hearing. The Court held that the power of provisional attachment under Section 83 is draconian and must be exercised only after complying with principles of natural justice, i.e., prior notice and opportunity of hearing. The order was quashed as it violated the petitioner's right to be heard. (Paras 1-13) B) Goods and Services Tax - Provisional Attachment - Section 83 of the Maharashtra Goods and Services Tax Act, 2017 - The Court held that Section 83 does not expressly exclude the application of natural justice. Therefore, before passing an order of provisional attachment, the authority must issue a show-cause notice and provide an opportunity of hearing to the taxpayer. The impugned order was set aside for non-compliance with natural justice. (Paras 3-13)
Issue of Consideration
Whether the order of provisional attachment of bank accounts under Section 83 of the Maharashtra Goods and Services Tax Act, 2017, passed without prior notice or opportunity of hearing, is sustainable in law.
Final Decision
The impugned order of attachment dated 11.01.2024 is quashed and set aside. The respondents are directed to release the attached bank accounts of the petitioner forthwith. However, this order does not preclude the respondents from initiating fresh proceedings in accordance with law after giving due notice and hearing to the petitioner.
Law Points
- Natural justice
- Provisional attachment
- Section 83 MGST Act
- Article 226 Constitution
- Writ of Certiorari
- Recovery proceedings
