HC Sets Aside DGGI’s Bank Account Freeze, Holds GST Authorities Must Record Reasons Before Attachment

The Gauhati High Court has set aside the provisional attachment of the bank account of the taxpayer company, Shri Petro Chemical Mercantile Private Limited. The Punjab & Sind Bank has been instructed to immediately unfreeze the assessee’s account. The court emphasised that the concerned tax authorities must first form a reasoned opinion that attachment is necessary to protect government revenue.

The assessee/company had challenged an Attachment Order dated February 27, 2026, through which its property (Bank Account) was provisionally seized by officials of the Directorate General of GST Intelligence (DGGI) under Section 83 of the Central Goods and Services Tax (CGST) Act, 2017. The provision allows authorities to temporarily confiscate a property, including bank accounts, to protect government revenue during tax proceedings.

During the personal hearing before the High Court, the assessee argued that the attachment order was passed mechanically and did not show that the competent authority had formed an independent opinion that such attachment was necessary. The company also claimed that the freeze had caused serious hardship for its business as it was unable to pay salaries to its employees and other dues.

After analysing the facts of the case, the court referenced an earlier ruling of the Supreme Court in a case titled Radha Krishan Industries v. State of Himachal Pradesh (2021), based on a similar issue. In the said case, the SC had held that powers under Section 83 are “draconian” and can be used only after strict compliance with statutory requirements. It was highlighted that the authority must first form a reasoned opinion that attachment is necessary to protect government revenue.

The Supreme Court had held that “In the present case, from a perusal of the impugned Attachment Order and particularly, in absence of any material available to the contrary, it can be seen that the impugned order has been passed in a mechanical manner without there being any formation of opinion by citing that the requirement was to protect the interest of the revenue and the authority was empowered to do so under Section 83 of the Act of 2017.”

When the attachment order was deeply examined by the high court, it was noted that it merely stated that the action was taken to protect revenue and under the powers granted by Section 83. The order did not reveal any prior formation of opinion or other material supporting the attachment.

Considering the aforementioned findings, the court quashed the impugned Attachment Order dated February 27, 2026, holding that the mandatory procedure had not been followed. The bank has been instructed to de-freeze the assessee’s account. Accordingly, the writ petition is allowed.