Bombay High Court
Navin Vishwanathan Prop Of M/S Oriental … vs State Of Maharashtra Throu. The Sec. … on 15 April, 2026
Author: G.S. Kulkarni
Bench: G.S. Kulkarni
2026:BHC-AS:17674-DB
7-A. WP 8709.2025.doc
Navin Vishwanathan vs. State of Mah.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 8709 OF 2025
Navin Vishwanathan Prop. of
M/s. Oriental Facility ... Petitioner
V/s.
State of Maharashtra and Ors. ... Respondents
_______________________________________
Mr. Sujit Sahoo a/w. Mr. Suresh Sharma a/w. Mr. Varun Sharma a/w. Mr. Zainab
Barmwala a/w. Ms. Reetu Sharma for the Petitioner
Ms. Shruti D. Vyas, Addl.G.P. a/w. Mr. Aditya R. Deolekar, AGP for Respondents -
State
_______________________________________
CORAM : G.S. KULKARNI AND
FARHAN P. DUBASH, JJ.
RESERVED ON : 26th MARCH 2026
PRONOUNCED ON : 15th APRIL 2026
Judgment (Per Farhan Dubash, J.) :
1. Rule. Rule made returnable forthwith. Learned Additional Government
Pleader waives service for the Respondents. By consent of parties, the Petition
is taken up for final disposal at the stage of admission.
2. The present Petition under Articles 226 and 300A of the Constitution of
India challenges a communication dated 21st March 2025 issued by
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Respondent No. 2 under Section 79(1)(c) read with Section 93(1)(a) of the
Central Goods and Services Tax Act, 2017 (“CGST Act“), whereby the
Petitioner’s bank account bearing no. 41485511814 maintained with the State
Bank of India, CBD Belapur Branch, came to be attached for recovery of
alleged outstanding GST dues of the Petitioner’s deceased father.
FAC T S I N B R I E F
3. The material facts, briefly stated, are as follows:
(a) The Petitioner’s father, late Mr. Pudugraman Neelakantan
Vishwanathan, carried on his proprietorship business under the trade
name “M/s. Oriental Facility”, holding GST Registration No.
27AMGPP7304N1ZL, with its principal place of business at Sector
8B, Flat No. C-232, Vikasani CHS, CBD Belapur, Thane – 400614.
(b) By an order dated 7th March 2024, passed on show cause notice dated
29th December 2022, the said GST registration stood suo motu
cancelled with effect from 1st January 2023.
(c) The Petitioner’s father passed away on 11 th February 2024.
(d) Prior to the demise of his father, the Petitioner is stated to have
commenced his independent proprietorship business engaged in labour
supply and employment services by adopting the same trade name of
“M/s. Oriental Facility “, allegedly as a mark of continuity with his
father’s legacy.
(e) On 22nd February 2023, the Petitioner obtained a separate GST
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registration for his said proprietorship business, bearing GSTIN
27ADXPN900D1ZD, and commenced operations from a separate and
distinct place of business, namely Office No. 807, Prabhat Center
Annex, CBD Belapur, Navi Mumbai – 400614.
(f) It is not in dispute that both proprietorships are separately registered
taxable entities under the GST regime.
(g) Five days after the demise of the Petitioner’s father, Respondent No. 2 /
Deputy Commissioner of State Tax issued an order in Form DRC-07
on 16th February 2024 raising a demand of approximately
₹3,86,61,652/- crores against the proprietorship concern of the
Petitioner’s deceased father under Rule 142(5) of the CGST Rules,
2017.
(h) On becoming aware of these proceedings, the Petitioner filed an appeal
challenging the attachment of his deceased father’s bank account/s on
6th February 2024 and also deposited 10% of the disputed tax. The
Petitioner thereafter addressed correspondence with the Department
seeking release of the bank account/s belonging to his deceased father.
(i) Considering this, the Department released the attachment of the bank
account/s of the Petitioner’s deceased father.
(j) Nearly one year thereafter, Respondent No. 2 invoked Sections 79 and
93 of the CGST Act and issued Form GST DRC-13 dated 21 st March
2025 to Respondent No. 3 / State Bank of India viz. the Petitioner’s
banker, directing recovery of dues aggregating ₹ 4,15,54,508/-
allegedly payable by the Petitioner’s deceased father towards tax, cess,
interest and penalty.
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(k) Pursuant thereto, the Petitioner’s bank account with Respondent No. 3
came to be frozen without issuance of any prior show cause notice or
affording any opportunity of hearing to him.
(l) The Petitioner immediately addressed a representation dated 24 th
March 2025 asserting that his proprietorship was distinct from that of
his deceased father despite similarity of trade name and requested de-
freezing of his personal bank account.
(m) No action was taken by Respondent No. 2, which resulted in the
Petitioner filing of the present Writ Petition.
PETITIONER’S SUBMISSIONS
4. Mr. Sahoo, learned counsel for the Petitioner submits that the Petitioner’s
proprietorship business is an independent taxable entity having a distinct GST
registration and separate place of business and the mere similarity of trade
name with that of the Petitioner’s deceased father cannot justify recovery
proceedings against a different taxable person. He further submits that no
proceedings under Section 93 determining liability of a legal heir were
initiated and the impugned attachment has been effected without issuance of
any show cause notice or grant of hearing, thereby violating principles of
natural justice; and coercive recovery under Section 79 cannot precede
adjudication of liability.
5. Mr. Sahoo relies on the following judgments which hold that a prior show
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cause notice was required to be issued by the Department to the Petitioner
before foisting any such GST liability of his deceased father on him:
(i) Galaxy International vs. Union of India1
(ii) Prasanna K Shetty vs. State of Maharashtra2
(iii) Arvind Traders vs. State of Uttar Pradesh3
(iv) Rajvanti Devi vs. State of UP4
(v) Baratam Satish vs. Joint Commissioner of Central Tax5
(vi) S. R. Steels vs. Deputy State Tax Officer, Hosur6
6. It is therefore submitted that the impugned action is ex facie illegal.
RES PO ND EN TS ‘ S UBM IS S ION S
7. Ms. Shruthi Vyas, learned Additional Government Pleader, supported by Mr.
Aditya Devalekar, appearing for Respondent Nos. 1 and 2, relies upon
affidavit in reply dated 25th March 2026, filed on behalf of the Respondents
and would submit that substantial GST dues of over ₹ 4,15,54,508/- crores
stand crystallised against the Petitioner’s deceased father. It is contended that
the Petitioner carries on his proprietorship business under the very same trade
name and had earlier also been associated with his father’s business during his
lifetime. They urge that the Department is therefore justified in treating the
Petitioner as having continued the proprietorship business of M/s. Oriental
1 (2025) 32 Centax 212 (Bom)
2 (2024) 17 Centax 418 (Bom)
3 (2025) 30 Centax 141 (All)
4 (2026) 40 Centax 10 (All)
5 (2026) 38 Centax 118 (A.P.)
6 (2024) 24 Centax 14 (Mad)
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Facility of his deceased father and in invoking Sections 79 and 93 of the
CGST Act.
8. They further contend that the Petition is not maintainable in view of alternate
statutory remedies already availed by the Petitioner.
A N A LY S I S & F I N D I N G S
9. Having heard learned counsel for the parties and perused the record, the
controversy lies within a narrow compass. The impugned action proceeds on
the premise that since both proprietorship concerns bear the same trade name,
viz. M/s. Oriental Facility, the Petitioner must be treated either as a successor
to, or continuation of, the business of his deceased father and consequently,
liable for his outstanding tax dues, by relying on Section 93(1)(a) of the CGST
Act.
10. For the sake of convenience, the provisions of Section 93(1)(a) of the CGST
Act, 2017 are reproduced hereunder:
“93. Special provisions regarding liability to pay
tax, interest or penalty in certain cases.
(1) Save as otherwise provided in the Insolvency and
Bankruptcy Code, 2016, where a person, liable to pay
tax, interest or penalty under this Act, dies, then —
(a) if a business carried on by the person is
continued after his death by his legal representative or
any other person, such legal representative or other
person, shall be liable to pay tax, interest or penalty
due from such person under this Act ; andPage 6 of 18
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(b) if the business carried on by the person is
discontinued, whether before or after his death, his
legal representative shall be liable to pay, out of the
estate of the deceased, to the extent to which the
estate is capable of meeting the charge, the tax,
interest or penalty due from such person under this
Act,
whether such tax, interest or penalty has been
determined before his death but has remained unpaid
or is determined after his death.”
11. At this stage, certain undisputed features assume significance:
(i) the Petitioner’s deceased father and the Petitioner hold separate
GST registrations;
(ii) both concerns operated from different registered places of business;
(iii) under the GST regime, each GSTIN constitutes an independent
taxable person; and
(iv) no show cause notice determining the Petitioner’s liability under
Section 93 of the CGST Act has been issued prior to attachment of
his bank account.
12. Recovery powers under Section 79 are undoubtedly wide. However, such
coercive powers pre-suppose the existence of an established liability against
the person from whom recovery is sought. Section 93 contemplates liability of
legal representatives or persons continuing the business of a deceased taxable
person. Whether the Petitioner satisfies the statutory conditions of that
provision is a matter requiring determination upon notice, consideration of
material, and hearing. This needs to be premised on materials and not
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presumptions.
13. In the present case, the Department has straightaway invoked recovery
proceedings and frozen the Petitioner’s bank account without first
determining whether the Petitioner’s proprietorship is legally distinct; whether
he has, in fact, continued the business of the deceased; or whether statutory
conditions under Section 93 stand satisfied.
14. The powers of provisional attachment to protect revenue in certain cases are
conferred under Section 83 of the CGST Act, 2017 which is required to be
noted, which reads thus:
“Section 83 : Provisional attachment to protect revenue in certain cases.
15.[(1) Where, after the initiation of any proceeding under Chapter XII, Chapter
XIV or Chapter XV, the Commissioner is of the opinion that for the purpose of
protecting the interest of the Government revenue it is necessary so to do, he
may, by order in writing, attach provisionally, any property, including bank
account, belonging to the taxable person or any person specified in sub-section
(1A) of section 122, in such manner as may be prescribed.]
16.(2) Every such provisional attachment shall cease to have effect after the
expiry of a period of one year from the date of the order made under sub-section
(1).”
Thus, the powers to attach the bank account of the petitioner is deemed to
emanate by application of Section 83. Insofar as the principles of law on
applicability of Section 83 to attach the bank account of a taxpayer is
concerned, the principles in that regard are well settled namely that the
designated officer is required to form an opinion in regard to tax liability of a
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person against whom such action of attachment of the bank account is required to be
taken. The Supreme Court in the case of Radha Krishan Industries v. State of Himachal
Pradesh7; has held that the basic requirement to exercise powers under Section 83 would be
to form an opinion based on tangible material so as to protect the interest of the
Government revenue. The following observations of the Supreme Court are required to be
noted, which read thus:
“41. Sub-section (1) of section 83 can be bifurcated into several
parts. The first part provides an insight on when in point of time or at
which stage the power can be exercised. The second part specifies the
authority to whom the power to order a provisional attachment is
entrusted. The third part defines the conditions which must be fulfilled
to validate the power or ordering a provisional attachment. The fourth
part indicates the manner in which an attachment is to be levelled. The
final and the fifth part defines the nature of the property which can be
attached. Each of these special divisions which have been explained
above is for convenience of exposition. While they are not watertight
compartments, ultimately and together they aid in validating an
understanding of the statute.
Each of the above five parts is now interpreted and explained below:
(i) The power to order a provisional attachment is entrusted during the
pendency of proceedings under any one of six specified provisions :
Sections 62, 63, 64, 67, 73 or 74. In other words, it is when a
proceeding under any of these provisions is pending that a provisional
attachment can be ordered;
(ii) The power to order a provisional attachment has been vested by the
Legislature in the Commissioner;
(iii) Before exercising the power, the Commissioner must be ‘of the
opinion that for the purpose of protecting the interest of the
Government revenue, it is necessary so to do’;
(iv) The order for attachment must be in writing;
(v) The provisional attachment which is contemplated is of any property
including a bank account belonging to the taxable person; and
(vi) The manner in which a provisional attachment is levied must be
specified in the rules made pursuant to the provisions of the statute.
7 (2021) 88 GSTR 228 (SC)
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42. Under sub-section (2) of section 83, a provisional attachment
ceases to have effect upon the expiry of a period of one year of the order
being passed under sub-section (1). The power to levy a provisional
attachment has been entrusted to the Commissioner during the
pendency of proceedings under sections 62, 63, 64, 67, 73 or as the case
may be, section 74. section 62 contains provisions for assessment for
non-filing of returns. Section 63 provides for assessment of unregistered
persons. Section 64 contains provisions for summary assessment.
Section 67 elucidates provisions for inspection, search and seizure.
Before we dwell on section 74, it would be material to note the
provisions of section 70 which are extracted below:
’70. Power to summon persons to give evidence and produce
documents.–
(1) The proper officer under this Act shall have powers to summon
any person whose attendance he considers necessary either to give
evidence or to produce a document or any other thing in any
inquiry in the same manner, as provided in the case of a civil court
under the provisions of the Civil Procedure Code, 1908 (5 of
1908).
(2) Every such inquiry referred to in sub-section (1) shall be
deemed to be a “judicial proceedings” within the meaning of
section 193 and section 228 of the Penal Code, 1860.’
43. A power is conferred by section 70 upon the proper officer to
summon a person whose attendance is considered necessary to give
evidence or produce a document or any other things in any enquiry in
the manner which is provided in the case of a civil court under the CPC.
44. Section 74 is extracted below:
’74. Determination of tax not paid or short paid or erroneously refunded
or input-tax credit wrongly availed or utilised by reason of fraud or any
wilful mis-statement or suppression of facts.–(1) Where it appears to
the proper officer that any tax has not been paid or short paid or
erroneously refunded or where input-tax credit has been wrongly availed
or utilised by reason of fraud, or any wilful mis-statement or suppression
of facts to evade tax, he shall serve notice on the person chargeable with
tax which has not been so paid or which has been so short paid or to
whom the refund has erroneously been made, or who has wrongly
availed or utilised input-tax credit, requiring him to show cause as to
why he should not pay the amount specified in the notice along with
interest payable thereon under section 50 and a penalty equivalent to
the tax specified in the notice.
(2) The proper officer shall issue the notice under sub-section (1) at
least six months prior to the time limit specified in sub-section (10) for
issuance of order.
(3) Where a notice has been issued for any period under sub- section
(1), the proper officer may serve a statement, containing the details of
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wrongly availed or utilised for such periods other than those covered
under sub-section (1), on the person chargeable with tax.
(4) The service of statement under sub-section (3) shall be deemed to be
service of notice under sub-section (1) of section 73, subject to the
condition that the grounds relied upon in the said statement, except the
ground of fraud, or any wilful misstatement or suppression of facts to
evade tax, for periods other than those covered under sub-section (1) are
the same as are mentioned in the earlier notice.
(5) The person chargeable with tax may, before service of notice under
sub-section (1), pay the amount of tax along with interest payable under
section 50 and a penalty equivalent to fifteen per cent. of such tax on the
basis of his own ascertainment of such tax or the tax as ascertained by
the proper officer and inform the proper officer in writing of such
payment.
(6) The proper officer, on receipt of such information, shall not serve
any notice under sub-section (1), in respect of the tax so paid or any
penalty payable under the provisions of this Act or the rules made
thereunder.
(7) Where the proper officer is of the opinion that the amount paid
under sub-section (5) falls short of the amount actually payable, he shall
proceed to issue the notice as provided for in sub-section (1) in respect
of such amount which falls short of the amount actually payable.
(8) Where any person chargeable with tax under sub-section (1) pays
the said tax along with interest payable under section 50 and a penalty
equivalent to twenty five per cent. of such tax within thirty days of issue
of the notice, all proceedings in respect of the said notice shall be
deemed to be concluded.
(9) The proper officer shall, after considering the representation, if any,
made by the person chargeable with tax, determine the amount of tax,
interest and penalty due from such person and issue an order.
(10) The proper officer shall issue the order under sub-section (9)
within a period of five years from the due date for furnishing of annual
return for the financial year to which the tax not paid or short paid or
input-tax credit wrongly availed or utilised relates to or within five years
from the date of erroneous refund.
(11) Where any person served with an order issued under sub- section
(9) pays the tax along with interest payable thereon under section 50
and a penalty equivalent to fifty per cent. of such tax within thirty days
of communication of the order, all proceedings in respect of the said
notice shall be deemed to be concluded.
Explanation 1.–For the purposes of section 73 and this section,–
(i) the expression “all proceedings in respect of the said notice” shall not
include proceedings under section 132; and
(ii) where the notice under the same proceedings is issued to the main
person liable to pay tax and some other persons, and such proceedings
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against the main person have been concluded under section 73 or
section 74, the proceedings against all the persons liable to pay penalty
under sections 122, 125, 129 and 130 are deemed to be concluded.
Explanation 2.–For the purpose of this Act, the expression
“suppression” shall mean non-declaration of facts or information which a
taxable person is required to declare in the return, statement, report or
any other document furnished under this Act or the rules made
thereunder, or failure to furnish any information on being asked for, in
writing, by the proper officer.’
45. Sub-section (1) of section 74 empowers the proper officer to serve a
notice on a person chargeable with tax where it appears that
(i) Any tax has not been paid;
(ii) Tax has been short paid;
(iii) Tax has been erroneously refunded; or
(iv) Input-tax credit has been wrongly availed or utilized by reason of
fraud, wilful mis-statement or suppression of fact to evade tax.
46. Sub-section (1) enables the proper officer to issue a notice to show
cause for the recovery of tax, interest payable under section 50 and the
penalty equivalent to the amount of tax specified in the notice. Sub-
sections (2), (3) and (4) lay down procedural provisions which are to be
followed by the proper officer.
Secondly, under sub-section (5) of section 74, before the service of a
notice under sub-section (1), the person who is chargeable with tax may
pay the tax together with interest and a penalty equivalent to fifteen per
cent., of the tax on the basis of their own ascertainment of the tax or as
ascertained by the proper officer and inform the proper officer of the
payment having been made upon receipt of the information. Sub-
section (6) stipulates that the proper officer shall not serve any notice
under sub-section (1) in respect of the tax so paid or any penalty payable
under the provisions of the Act or the Rules.
47. On the other hand, when the proper officer is of the opinion that the
amount which has been paid under sub-section (5) falls short of the
amount which is actually payable, a notice under sub-section (1) is to
issue for the amount which falls short of what is actually payable. Sub-
section (8) contains a stipulation that where a person who is chargeable
with tax under sub-section (1) pays the tax together with interest and a
penalty of twenty-five per cent., of the tax within thirty days of the
issuance of the notice, all proceedings in respect of the notice shall be
deemed to be concluded. Under sub- section (9), the proper officer after
considering the representation of the person chargeable to tax is
authorized to determine the amount of tax, interest and penalty due and
to issue an order. A period of five years is stipulated by sub-section (10)
for the issuance of an order in sub-section (9). Sub-section (11)
stipulates that upon service of an order under sub-section (9), all
proceedings in respect of the notice shall be deemed to be concluded
upon the person paying the tax with interest under section 50 and a
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penalty equivalent to 50 per cent. of the tax within thirty days of the
communication of an order. These provisions indicate how sub-sections
(5), (8) and (11) operate at different stages of the process.
48. Now in this backdrop, it becomes necessary to emphasize that
before the Commissioner can levy a provisional attachment, there must
be a formation of ‘the opinion’ and that it is necessary ‘so to do’ for the
purpose of protecting the interest of the Government revenue. The
power to levy a provisional attachment is draconian in nature. By the
exercise of the power, a property belonging to the taxable person may be
attached, including a bank account. The attachment is provisional and
the statute has contemplated an attachment during the pendency of the
proceedings under the stipulated statutory provisions noticed earlier. An
attachment which is contemplated in section 83 is, in other words, at a
stage which is anterior to the finalization of an assessment or the raising
of a demand. Conscious as the Legislature was of the draconian nature of
the power and the serious consequences which emanate from the
attachment of any property including a bank account of the taxable
person, it conditioned the exercise of the power by employing specific
statutory language which conditions the exercise of the power. The
language of the statute indicates first, the necessity of the formation of
opinion by the Commissioner; second, the formation of opinion before
ordering a provisional attachment; third the existence of opinion that it
is necessary so to do for the purpose of protecting the interest of the
Government revenue; fourth, the issuance of an order in writing for the
attachment of any property of the taxable person; and fifth, the
observance by the Commissioner of the provisions contained in the
rules in regard to the manner of attachment. Each of these components
of the statute are integral to a valid exercise of power. In other words,
when the exercise of the power is challenged, the validity of its exercise
will depend on a strict and punctilious observance of the statutory pre-
conditions by the Commissioner. While conditioning the exercise of the
power on the formation of an opinion by the Commissioner that ‘for the
purpose of protecting the interest of the Government Revenue, it is
necessary so to do’, it is evident that the statute has not left the
formation of opinion to an unguided subjective discretion of the
Commissioner. The formation of the opinion must bear a proximate and
live nexus to the purpose of protecting the interest of the Government
Revenue.
49. By utilizing the expression ‘it is necessary so to do’ the Legislature
has evinced an intent that an attachment is authorized not merely
because it is expedient to do so (or profitable or practicable for the
revenue to do so) but because it is necessary to do so in order to protect
interest of the Government revenue. Necessity postulates that the
interest of the revenue can be protected only by a provisional attachment
without which the interest of the revenue would stand defeated.
Necessity in other words postulates a more stringent requirement than a
mere expediency. A provisional attachment under section 83 is
contemplated during the pendency of certain proceedings, meaning
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thereby that a final demand or liability is yet to be crystallized. An
anticipatory attachment of this nature must strictly conform to the
requirements, both substantive and procedural, embodied in the statute
and the rules. The exercise of unguided discretion cannot be permissible
because it will leave citizens and their legitimate business activities to
the peril of arbitrary power. Each of these ingredients must be strictly
applied before a provisional attachment on the property of an assesses
can be levied. The Commissioner must be alive to the fact that such
provisions are not intended to authorize Commissioners to make
preemptive strikes on the property of the assessee, merely because
property is available for being attached. There must be a valid formation
of the opinion that a provisional attachment is necessary for the purpose
of protecting the interest of the Government revenue.
50. These expressions in regard to both the purpose and necessity of
provisional attachment implicate the doctrine of proportionality.
Proportionality mandates the existence of a proximate or live link
between the need for the attachment and the purpose which it is
intended to secure. It also postulates the maintenance of a proportion
between the nature and extent of the attachment and the purpose which
is sought to be served by ordering it. Moreover, the words embodied in
sub-section (1) of section 83, as interpreted above, would leave no
manner of doubt that while ordering a provisional attachment the
Commissioner must in the formation of the opinion act on the basis of
tangible material on the basis of which the formation of opinion is based
in regard to the existence of the statutory requirement. While dealing
with a similar provision contained in section 45 (section 45(1) provides
as follows):
’45. Provisional attachment.–(1) Where during the tendency of any
proceedings of assessment or reassessment of turnover escaping
assessment, the Commissioner is of the opinion that for the purpose of
protecting the interest of the Government Revenue, it is necessary so to
do, he may by order in writing attach provisionally any property
belonging to the dealer in such manner as may be prescribed.” of the
Gujarat Value Added tax Act, 2003, one of us (honourable Mr. Justice
MR Shah) speaking for a Division Bench of the Gujarat High Court
in Vishwanath Realtor v. State of Gujarat (Special Civil No. 7210 of
2015, decided on April 29, 2015) [(2015) 5 VST-OL 16 (Guj).]
observed (page 24 in 5 VST-OL):
“8.3. Section 45 of the VAT Act confers powers upon the Commissioner
to pass the order of provisional attachment of any property belonging to
the dealer during the pendency of any proceedings of assessment or
reassessment of turnover escaping assessment. However, the order of
provisional attachment can be passed by the Commissioner when the
Commissioner is of the opinion that for the purpose of protecting the
interest of the Government Revenue, it is necessary so to do. Therefore,
before passing the order of provisional attachment, there must be an
opinion formed by the Commissioner that for the purpose of protecting
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proceedings of assessment or reassessment, it is necessary to attach
provisionally any property belonging to the dealer.
However, such satisfaction must be on some tangible material on
objective facts with the Commissioner. In a given case, on the basis of
the past conduct of the dealer and on the basis of some reliable
information that the dealer is likely to defeat the claim of the Revenue in
case any order is passed against the dealer under the VAT Act and/or the
dealer is likely to sale his properties and/or sale and/or dispose of the
properties and in case after the conclusion of the
assessment/reassessment proceedings, if there is any tax liability, the
Revenue may not be in a position to recover the amount thereafter, in
such a case only, however, on formation of subjective
satisfaction/opinion, the Commissioner may exercise the powers under
section 45 of the VAT Act”.’
(emphasis supplied)
51. We adopt the test of the existence of ‘tangible material’. In
this context, reference may be made to the decision of this court in the
Commissioner of Income-tax v. Kelvinator of India Ltd. [(2010) 320
ITR 561 (SC); (2010) 2 SCC 723.] Mr. Justice SH Kapadia (as the
learned Chief Justice then was) while considering the expression ‘reason
to believe’ in section 147 of the Income-tax Act, 1961 that income
chargeable to tax has escaped assessment, inter alia, by the omission or
failure of the assessee to disclose fully and truly all material facts
necessary for the assessment of that year, held that the power to reopen
an assessment must be conditioned on the existence of ‘tangible
material’ and that ‘reasons must have a live link with the formation of
the belief’. This principle was followed subsequently in a two-Judge
Bench decision in Income-tax Officer, Ward No. 162(2) v.Techspan
India Private Ltd. [(2018) 404 ITR 10 (SC); (2018) 6 SCC 685.] While
adverting to these decisions we have noticed that section 83 of the
HPGST Act uses the expression ‘opinion’ as distinguished from ‘reasons
to believe’. However for the reasons that we have indicated earlier we are
clearly of the view that the formation of the opinion must be based on
tangible material which indicates a live link to the necessity to order a
provisional attachment to protect the interest of the Government
Revenue.”
15. Thus a bank account constitutes property within the meaning of Article
300A of the Constitution of India. Hence, the action of Respondent No. 2 in
freezing the Petitioner’s bank account without any prior show cause
notice being issued to him and/or affording him an opportunity to put forth
his objections thereto, results in civil consequences resulting in a violation
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of his constitutional rights since he has been deprived of his property, without
the due process of law being followed.
16. The principles of natural justice require that before fastening liability
upon a person, particularly where coercive recovery measures affecting
property i.e, in the present case the banking operations are invoked, such
person must be put to notice and afforded an effective opportunity to present
his case. Our view is also supported by the judgments relied upon by
the Petitioner.
17. In the facts of the present case the designated officer needs to undertake an
exercise to determine in what manner the Petitioner would become liable to
discharge the tax dues of his deceased father’s business. It would be difficult to
accept a proposition that merely because there is similarity of trade name, this
alone would authorise automatic recovery from the Petitioner who is an
indirect registered taxable person that too without any prior adjudicatory
process.
18. In the present case, in our opinion Respondent No. 2 has thus committed a
jurisdictional error in issuing the impugned communication to Respondent
No. 3. Such defect goes to the root of the matter. Moreover, principles of
natural justice have also clearly been violated. Hence, this action warrants
interference from this Court in exercise of its extraordinary writ jurisdiction
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under Article 226 of the Constitution of India. Thus the objection as urged on
behalf of the Respondents on the alternate remedy is devoid of any merit.
19. We clarify that the observations herein are purely prima facie and confined to
examining the legality of the impugned recovery action. The Department is
thus free to independently examine the issue of any liability of the Petitioner
in accordance with law and uninfluenced by any observations contained in
this order.
20. In view of the above discussion, the following order is passed:
(i) The impugned communication dated 21 st March 2025 issued in Form
GST DRC-13 attaching the Petitioner’s bank account bearing
no.41485511814 is quashed.
(ii) Accordingly, Respondent No. 3 shall de-freeze the Petitioner’s bank
account bearing no. 41485511814 forthwith and in any event, within
one week from the date of uploading of this order.
(iii) It shall be open to Respondent No. 2 to initiate appropriate
proceedings against the Petitioner, in the event the department is of the
opinion that the dues of the Petitioner’s deceased father – late Mr.
Pudugraman Neelakantan Vishwanathan towards tax, cess, interest and
penalty under the provisions of the CGST Act, 2017 are recoverable
from the Petitioner as per the requirement of law including under
Section 93 thereof.
(iv) All contentions of the parties in such regard on merits are expressly
kept open.
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20. The Petition is accordingly allowed in the aforesaid terms. Rule is made
absolute. No order as to costs
( FARHAN P. DUBASH, J. ) ( G.S. KULKARNI, J. )
Digitally signed
JYOTI by JYOTI
PRAKASH
PRAKASH PAWAR
PAWAR Date: 2026.04.15
19:43:03 +0530
Jyoti Pawar
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