Case Title: Patran Steel Rolling Mill v. Assistant Commissioner of State Tax, Unit-2
Court: High Court of Gujarat
Petition No.: Special Civil Application No. 16931 of 2018
Relevant Section: Section 83 of the Gujarat Goods and Services Tax Act, 2017
Category of Dispute: Provisional Attachment
Date of Judgement: December 20, 2018
Relevant Provisions: Section 83 of the CGST Act, Rule 139(2) of the CGST Rules
Facts of the Case
[¶2] The petitioner, engaged in manufacturing and supplying TMT bars, faced search operations by the Assistant Commissioner, State Tax on 11.10.2018. Allegedly, excess stock worth ₹51.73 lakhs was found. Based on a transporter’s statement, it was claimed that goods were received and supplied without GST payment. The petitioner asserted that under coercion, a statement and ₹17 lakhs were taken by the officer.
[¶2.1] On 12.10.2018, goods were seized via Form GST INS-02. Later, on 22.10.2018, multiple bank accounts of the petitioner and proprietor were provisionally attached, severely hampering business operations.
Question(s) in Consideration
[¶3] Whether the provisional attachment under Section 83 of the GGST Act was legally valid in absence of pending proceedings under Section 62, 63, 64, 67, 73 or 74 of the Act?
[¶3.1] Whether the provisional attachment and seizure of goods were excessive and disproportionate considering a deposit of ₹17,00,000 already made?
Observations of the Court
[¶5] The court noted the tax liability computation was inflated by adding 100% to the actual goods and transporter’s statement. This artificially doubled the demand, which was not supported by due proceedings.
[¶6] Since no proceedings under Sections 62, 63, 64, 67, 73 or 74 were pending, invoking Section 83 was premature and legally unsustainable. Further, ₹17 lakhs were already deposited by the petitioner—exceeding the actual tax liability (≈ ₹13 lakhs)—sufficient to secure revenue interest.
[¶7] The court emphasized that provisional attachment is a drastic measure and must only be exercised where there is tangible evidence of risk to revenue recovery. In this case, the firm was operational and not a fly-by-night operator, hence no justification for such coercive action existed.
[¶8] The court warned tax authorities to balance tax recovery with business continuity, stressing that halting a running business without legal basis serves no one, including the revenue.
Judgement of the Court
[¶9] The Gujarat High Court allowed the writ petition. It quashed the order of provisional attachment dated 22.10.2018 and the seizure order dated 12.11.2018 under Rule 139(2). The authorities were directed to release all bank accounts and seized goods of the petitioner.
[¶10] Rule made absolute with no order as to costs.
Between Fine Lines
- Provisional attachment under Section 83 can only be exercised if proceedings under specific sections are pending.
- A mere search or statement without assessment proceedings does not justify drastic actions.
- A deposit made voluntarily should be factored before coercive recovery steps.
- Tax authorities must not cripple ongoing businesses unnecessarily.
- Courts will intervene when taxpayer rights are compromised without legal grounds.
Summary of Referred Cases
| Name of Case | Citation | Summary | Verdict |
| No specific external cases were cited or relied upon in this judgement | — | — | — |
Takeaway:
“When Tax Recovery Crosses Legal Boundaries – Safeguarding Business Against Arbitrary Attachment”
