High Court Quashes GST Bank Attachment for Lack of Reasons, Remands Matter to Department

The Bombay High Court, comprising Justices G.S. Kulkarni and Aarti Sathe, has delivered its final ruling on a writ petition filed by Bajaj International Realty Private Limited against the State of Maharashtra, Commissioner of State Tax and Others, challenging an order dated December 03, 2025, passed by the Joint Commissioner of State Tax. The said order had provisionally attached the company’s bank account with HDFC Bank under Section 83 of the Maharashtra Goods and Services Tax Act, 2017, on the grounds that the company had not paid its GST liability of approximately Rs 42.68 crore concerning flats handed over during a redevelopment project.

The petitioner also challenged an order dated December 29, 2025, passed by the Joint Commissioner of State Tax. The said order had rejected submissions made by the company and maintained the provisional attachment of the company’s bank account with HDFC Bank.

The petitioner company had entered into an agreement with the Housing Society on May 09, 2011, for the development and construction of residential buildings and the redevelopment of existing old buildings. Under which, the petitioner was required to hand over 168 flats to the existing members of the society and 12 flats to the Building Permission Cell, Greater Mumbai / Maharashtra Area and Housing Development Authority (MHADA) without any consideration. The company flagged that since these flats were all provided free of cost, there was no “Supply” under the GST law and therefore no tax liability. The company also claimed that it had paid all its tax dues on the remaining flats sold commercially.

The tax department had started an investigation against the company in 2015, under Section 67 of the MGST Act. During which the department noted mismatches of non-payment of taxes on the taxable supply of construction services to existing members of society and MHADA. Thereafter, a show cause notice (SCN) was issued addressing the company, proposing a tax demand amounting to Rs. 42.68 crore. Subsequently, the company challenged the notice; however, the department rejected all the raised objections without giving valid reasons and sustained the tax demand.

Relying on the Supreme Court’s ruling in Radha Krishan Industries v. State of Himachal Pradesh, the High Court held that provisional attachment is a serious and extraordinary power that must be exercised carefully. Authorities must provide reasons and give a fair hearing. Since the attachment orders issued by the tax authorities did not contain proper reasoning, the Court quashed them and sent the matter back to the tax authority for fresh consideration after allowing the company to be heard.