Bombay High Court Quashes Provisional Attachment of Bajaj International Realty’s Bank Accounts Under MGST Act, Orders Fresh Hearing

In a significant judgment, the Bombay High Court has quashed the provisional attachment orders issued against Bajaj International Realty Pvt. Ltd. under Section 83 of the Maharashtra Goods and Services Tax Act, 2017 (MGST Act), remanding the matter for a fresh decision after ensuring compliance with procedural safeguards and the requirement of a reasoned order.

The petitioner, Bajaj International Realty Pvt. Ltd., engaged in the redevelopment of residential buildings, challenged the orders dated 3 December 2025 and 9 January 2026, which provisionally attached its bank accounts with HDFC Bank branches in Mumbai. The attachments were made during an investigation into alleged non-payment of GST on the supply of construction services to existing owners and MHADA, where flats were handed over without consideration. The petitioner contended that such handovers did not constitute taxable supply and that all tax liabilities on free-sale flats had been duly discharged.

The investigation under Section 67 of the MGST Act led to the issuance of a pre-show cause notice demanding over Rs. 42 crore, premised on the alleged taxable supply to existing owners and MHADA. Despite detailed objections and submissions by the petitioner, the authorities maintained the provisional attachments, prompting the present writ petition under Article 226 of the Constitution.

Arguments and Legal Principles

Counsel for the petitioner argued that the exercise of provisional attachment powers under Section 83 is extraordinary and must not be exercised mechanically. It was submitted that the impugned orders lacked any reasoning, failed to address the petitioner’s detailed objections, and did not consider the legal position that no taxable supply occurred in respect of flats handed over free of cost. Reliance was placed on the Supreme Court’s decision in Radha Krishan Industries v. State of Himachal Pradesh (2021) 6 SCC 771, which emphasized that provisional attachment is a draconian power requiring strict compliance with statutory preconditions, including the formation of a reasoned opinion and observance of procedural safeguards such as the right to be heard and the requirement to pass a reasoned order on objections.

The petitioner also cited the Bombay High Court’s own decision in Originative Trading Pvt. Ltd. v. Union of India (2022) 65 GSTL 144, which reiterated that the Commissioner must exercise due diligence, carefully examine all facts, and provide reasons when passing orders of provisional attachment. The Court in that case held that failure to pass a reasoned order after considering objections renders the attachment illegal.

The State, represented by the learned AGP, defended the action but conceded that the impugned orders did not furnish any reasons.

Court’s Reasoning and Decision

The Division Bench, comprising Justice G.S. Kulkarni and Justice Aarti Sathe, found that the impugned orders, including the rejection of the petitioner’s objections, were bereft of any reasons. The Court held that this violated the principles laid down by the Supreme Court and the High Court itself, which require that objections to provisional attachment must be addressed by a reasoned order. The absence of such reasoning, especially in the face of detailed objections, amounted to a breach of basic legal tenets and procedural fairness.

Accordingly, the Court quashed and set aside the provisional attachment orders dated 3 December 2025 and 9 January 2026. The proceedings under Section 83 of the MGST Act were remanded to the competent authority (respondent no. 3) with directions to grant the petitioner an opportunity of hearing and to pass a fresh, reasoned order in accordance with law. The Court clarified that it had not expressed any opinion on the merits of the pre-show cause notice issued under Section 74(5) of the MGST and CGST Acts, keeping all contentions open for future adjudication.

Conclusion

This judgment reinforces the requirement for tax authorities to strictly adhere to statutory safeguards and procedural fairness when exercising the power of provisional attachment under GST laws. The decision underscores that such coercive measures must be supported by a reasoned order, especially when detailed objections are raised, and that failure to do so will result in the attachment being set aside.