Bombay High Court Holds Bank Account Attachment for Deceased Taxpayer’s GST Dues Requires Prior Notice and Adjudication Under Section 93 CGST Act

Background and Context
The petitioner challenged the attachment of his personal bank account by GST authorities for recovery of alleged outstanding GST dues owed by his deceased father. The petitioner and his late father each operated separate proprietorships, both registered under the GST regime, albeit under the same trade name. The petitioner obtained his own GST registration and operated from a different business address. Following the death of the petitioner’s father, the authorities issued a demand for tax dues and subsequently froze the petitioner’s bank account without issuing any prior notice or providing an opportunity to be heard.

Legal Issues and Submissions
The central issue before the Bombay High Court was whether the authorities could lawfully attach the bank account of the petitioner, a distinct GST registrant, for the tax dues of his deceased father, solely on the basis of a similar trade name, and without following the procedure prescribed under Section 93 of the CGST Act. The petitioner argued that his business was a separate taxable entity and that no proceedings had been initiated to determine his liability as a legal heir or successor. He contended that the attachment was effected without any show cause notice or hearing, violating principles of natural justice and Article 300A of the Constitution.

The respondents contended that the petitioner was a continuation of his father’s business and that the department was justified in invoking Sections 79 and 93 of the CGST Act for recovery. They also argued that the petitioner had alternate statutory remedies.

Court’s Analysis and Reasoning
The Court examined the statutory framework under Section 93(1)(a) of the CGST Act, which provides for the liability of legal representatives or persons continuing the business of a deceased taxpayer. The Court noted several undisputed facts: the petitioner and his father had separate GST registrations, operated from different premises, and were recognized as independent taxable persons under GST law. Crucially, no show cause notice or adjudication of liability under Section 93 had been initiated against the petitioner prior to the attachment.

The Court emphasized that the wide recovery powers under Section 79 of the CGST Act presuppose an established liability, which must be determined through due process. The Court further relied on the Supreme Court’s decision in Radha Krishan Industries v. State of Himachal Pradesh, underscoring that provisional attachment of property, including bank accounts, is a draconian measure that must be exercised strictly in accordance with statutory safeguards, including the formation of an opinion based on tangible material and adherence to principles of proportionality.

The Court held that freezing the petitioner’s bank account without prior notice or an opportunity to be heard amounted to a violation of the principles of natural justice and Article 300A, which protects the right to property. The mere similarity of trade names was deemed insufficient to justify automatic recovery from the petitioner without a prior adjudicatory process.

Decision and Directions
The Bombay High Court quashed the impugned communication attaching the petitioner’s bank account and directed the bank to de-freeze the account forthwith. The Court clarified that the department remains at liberty to initiate appropriate proceedings to determine the petitioner’s liability, if any, in accordance with law, including under Section 93 of the CGST Act, after following due process.

All contentions on merits were expressly kept open for future proceedings. The petition was allowed, and the rule made absolute, with no order as to costs.

This decision reinforces the requirement for tax authorities to strictly adhere to statutory procedures and principles of natural justice before taking coercive recovery actions against legal heirs or successors of deceased taxpayers under the GST regime.