ORDER

1. With the consent of the learned counsel appearing for the parties, the matter is taken up for final disposal.

2. By this writ-application under Article 226 of the Constitution of India, the writ-applicant has prayed for the following reliefs:-

“11(a) be pleased to issue a writ of Certiorari or a writ in the nature of certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the petitioner’s case and after going into the validity and legality thereof to quash and set aside

(i) impugned orders dated 11.03.2021, 16.03.2021 and 12.10.2021 passed by respondent no.2 purporting to attach the bank accounts of the petitioner and

(ii) impugned order dated 29.06.2021 passed by respondent no.2 in rejecting the representation filed by the petitioner;  

(b) be pleased to issue a writ of mandamus or any other appropriate writ in the nature of mandamus ordering and directing the respondents to forthwith withdraw and/or cancel the impugned orders dated 11.03.2021, 16.03.2021 and 12.10.2021 passed by respondent no.2 and to release the bank accounts of the petitioner from the impugned attachment;

(c) that pending the hearing and final disposal of the above petition, be pleased to stay the effect and operation of impugned orders dated 11.03.2021, 16.03.2021 and 12.10.2021 passed by respondent no.1 and, by an interim order and injunction of this Hon’ble Court direct the respondent no.2 to forthwith permit the petitioner to operate bank accounts maintained with respondent nos.3 to 5;

(d) an ex-parte ad-interim relief in terms of prayer (d) above may kindly be granted;

(e) such other and further order or orders as may be deemed just and proper in the facts and circumstances of the present case may kindly be granted.”

3. We need not delve much into facts of this case giving rise to the present litigation, as our order dated 2nd February 2022 would make the picture clear. The same reads thus:-

“1. We have heard Mr. Prakash Shah, the learned senior counsel assisted by Mr. Dhaval Shah, the learned counsel appearing for the writ-applicant.

2. The writ-applicant is engaged in the business of trading of bullion and agricultural commodities. The writ-applicant is registered under the CGST Act.

3. The subject matter of challenge in the present writ-application is the action on the part of the respondent no.2 in passing three orders of provisional attachment of three individual bank accounts of the writ-applicant in exercise of powers under Section-83 of the CGST Act. The first order with respect to provisional attachment of a Current Account maintained with the Bank of India is at Page-76 of the paper-book. The second order with respect to provisional attachment of a Current Account maintained with the Kotak Mahindra Bank Ltd. is at Page-87 of the paper-book and the third order with respect to provisional attachment of a Current Account maintained with the ICICI Bank is at Page-109 of the paper-book.

4. Mr. Shah, the learned senior counsel would submit that before the Commissioner can proceed to pass an order of provisional attachment of bank accounts, 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. He would submit that by-now it is well-settled position of law as explained by this High Court and also, affirmed by the Supreme Court in the case of Radha Krishan Industries Vs. State of Himachal Pradesh and Others reported in (2021) 6 SCC 771 that the power to levy a provisional attachment is draconian in nature. Mr. Shah invited the attention of this Court to Paragraph- 76 of the judgment of the Supreme Court, wherein, the Supreme Court has summarized its findings as under:-

“76. For the above reasons, we hold and conclude that:-

76.1 The Joint Commissioner while ordering a provisional attachment under Section-83 was acting as a delegate of the Commissioner in pursuance of the delegation effected under Section 5(3) and an appeal against the order of provisional attachment was not available under Section 107(1);

76.2 The writ petition before the High Court under Article 226 of the Constitution challenging the order of provisional attachment was maintainable;

76.3 The High Court has erred in dismissing the writ petition on the ground that it was not maintainable;

76.4 The power to order a provisional attachment of the property of the taxable person including a bank account is draconian in nature and the conditions which are prescribed by the statute for a valid exercise of the power must be strictly fulfilled;

76.5 The exercise of the power for ordering a provisional attachment must be preceded by the formation of an opinion by the Commissioner that it is necessary so to do for the purpose of protecting the interest of the government revenue. Before ordering a provisional attachment the Commissioner must form an opinion on the basis of tangible material that the assessee is likely to defeat the demand, if any, and that therefore, it is necessary so to do for the purpose of protecting the interest of the government revenue.  

76.6 The expression “necessary so to do for protecting the government revenue” implicates that the interests of the government revenue cannot be protected without ordering a provisional attachment;

76.7 The formation of an opinion by the Commissioner under Section 83(1) must be based on tangible material bearing on the necessity of ordering a provisional attachment for the purpose of protecting the interest of the government revenue;

76.8 In the facts of the present case, there was a clear non-application of mind by the Joint Commissioner to the provisions of Section 83, rendering the provisional attachment illegal;

76.9 Under the provisions of Rule 159(5), the person whose property is attached is entitled to dual procedural safeguards:

(a) An entitlement to submit objections on the ground that the property was or is not liable to attachment; and

(b) An opportunity of being heard;

There has been a breach of the mandatory requirement of Rule 159(5) and the Commissioner was clearly misconceived in law in coming into conclusion that he had a discretion on whether or not to grant an opportunity of being heard;

5. Prima-facie, it appears on plain reading of the three orders of the provisional attachment referred to above that the same does not record any satisfaction that it is necessary to provisionally attach the bank accounts so as to protect the interest of the revenue. Mr. Shah would submit that it is not just necessary for the concerned authority to point out such satisfaction from the original file or from the notings. Such satisfaction should be reflected in the very order passed by the authority.

6. The second limb of Mr. Shah’s submission is that at a point of time, when the powers under section-83 of the Act came to be exercised, the proceedings of the search under Section-67 of the Act had already come to an end. He would submit that as on date, there are no proceedings pending. Mr. Shah says so because till this date, the Department has not even thought fit to issue any show-cause notice. In such circumstances, according to Mr. Shah, the orders of provisional attachment cannot remain in force.  

7. Let Notice be issued to the respondents, returnable on 16.02.2022. Direct service to the respondents nos.2 to 5 is permitted. The respondent no.1 shall be served at the earliest by E-mail. In the meantime, Mr. Dhaval Shah, the learned counsel shall furnish one set of his entire paper-book to Mr. Devang Vays, the learned Additional Solicitor General of India, who would be appearing for the respondents. On the returnable date, notify this matter on top of the board.

8. On the next date of hearing, we would like to know from Mr. Shah as to what is the amount in the three bank accounts, which have been provisionally seized. Recently, the Central Board of Indirect Taxes & Customs has issued a Circular providing for certain guidelines. The one of the instructions provide that the action should not be of such a type that the entire business of the firm/ assessee would come to a standstill. We shall look into this Circular also on the next date of hearing.”

4. The subject matter of challenge is the legality and validity of the action on the part of the respondent no.2 herein in passing three distinct orders of provisional attachment of three bank accounts of the writ-applicant. The details of the three bank accounts are under:-

Sr. No.	Bank Name	Bank Account No.	Amount
1.	Bank of India	4201000817	37,46,284.86/-
2.	ICICI Bank	026105009253	1,98,74,853.20/-
3.	Kotak Mahindra Bank	1012078742	92,054.90/-

5. Thus, it appears that as on date, the aggregate of ₹ 2,37,13,192=96 is lying to the credit of the writ-applicant in the three bank accounts. It also appears that after the three orders came to be passed under Section-83 of the Act, the writ-applicant filed a representation addressed to the respondent no.2 herein. The representation was considered under Rule 159(5) of the Rules, 2017 and ultimately came to be rejected.

6. Manifold contentions have been raised by Mr. Prakash Shah, the learned senior counsel appearing for the writ-applicant. One of the principal submissions of Mr. Shah is that if the entire amount lying in the three bank accounts is freezed, its going to very difficult for the writ-applicant to continue with his business.

7. When the matter was first taken up for hearing, we inquired with Mr. Shah whether his client would be ready and willing to furnish some tangible security so as to protect the interest of the revenue. The whole idea in putting this question to Mr. Shah was that upon furnishing of such tangible security, we may de-freeze the three bank accounts. Mr. Shah prayed that the matter may be kept back for sometime to enable him to take appropriate instructions from his client.

8. When the matter was again taken up, Mr. Shah made a statement that his client is ready and willing to furnish the bank guarantee to the tune of ₹ 1.25 Crore. We are of the view that if the writ-applicant is ready and willing to furnish the bank guarantee to the extent of ₹ 1.25 Crore of Bank of India or ICICI Bank, then, in such circumstances, we should order that the provisional attachment may no longer continue.

9. We also heard Mr. Dhaval Vyas, the learned senior counsel appearing for the Department. According to Mr. Vyas, the bank guarantee of ₹ 1.25 Crore would not protect the interest of the revenue as the liability is almost ₹ 60 Crore. Assuming for the moment that the liability is of ₹ 60 Crore, what the writ-applicant has today in his bank account is just a little more than ₹ 2 Crore.

10. We are of the view that we should ask the writ-applicant to furnish the bank guarantee of ₹ 1.25 Crore and also, ask the individual Directors of the Company to file an undertaking in writing before this Court on oath by tomorrow that ultimately if any liability of the Company is fixed, they would discharge the same so far as the balance amount is concerned i.e. approximately 1.12 crore.

11. We dispose of this writ-application with a direction to the respondent no.2 to de-freeze the three bank accounts upon the writ-applicant furnishing a bank guarantee of ₹ 1.25 Crore and individual undertakings of the Directors of the company as above.

12. The bank guarantee shall continue till the statutory time period of all the three orders passed under Section-83 of the Act comes to an end. If the Department deems fit to continue with the provisional attachment or pass a fresh order, it may do so, but then, the bank guarantee shall also continue.

13. We would like to clarify something. If it is the case of the Department that the Company has indulged in fraudulent transactions or the company has committed gross violations of the provisions of the Act or the amount due and payable is huge, then it is expected of the Department to expedite the inquiry and ultimately, if it is convinced of the case put up so far, should not delay the issue of show-cause notice. It should not happen that the inquiry continues for an indefinite period of time without issuance of any appropriate show-cause notice. We are saying so because if the inquiry is to continue for an indefinite period and no notice is issued, then unnecessarily the bank guarantee would also continue. We also expect the writ-applicants to co-operate in the inquiry and produce all the necessary documents as demanded by the Department.

14. With the aforesaid, this writ-application stands disposed of.