M/s Tanwar Rajput & Company v. State of Rajasthan & Ors.

(D.B. Civil Writ Petition No. 16939/2025)

Facts

• The petitioner is a running company engaged in business.
• Summons were issued to the petitioner under Section 70 of the Rajasthan Goods and Services Tax Act, 2017 on 25.07.2025, seeking reversal of input tax credit in relation to certain purchases.
• The petitioner submitted a detailed reply, clarifying that the reversal amount as claimed had already been accounted for.
• No notice under Section 74 of the Act was issued against the petitioner.
• Despite the above, the petitioner’s bank accounts were provisionally attached, resulting in serious disruption of business operations.
• Aggrieved by the provisional attachment, the petitioner approached the High Court.

Petitioner’s Arguments

• Learned Senior Counsel submitted that the action of provisional attachment was arbitrary and disproportionate, particularly in the absence of any proceedings under Section 74 of the Act.
• It was argued that mere issuance of summons under Section 70 does not justify coercive measures such as attachment of bank accounts, especially when the alleged liability was already explained.
• Reliance was placed on:

• M/s Nova Publications & Printers Pvt. Ltd. v. Union of India, wherein provisional attachment orders were set aside; and
• the judgment of the Supreme Court in Radha Krishnan Industries v. State of Himachal Pradesh & Ors., (2021) 6 SCC 771, laying down strict parameters governing provisional attachment.

• It was submitted that the petitioner, being a running company, would suffer irreparable harm if the attachment was allowed to continue.
• Without prejudice, the petitioner expressed readiness to furnish solvent security of ₹81.73 lakh, being the disputed amount.

Respondents’ Arguments

• Learned counsel appearing for the State opposed the writ petition.
• It was contended that the action was taken in exercise of statutory powers under the GST regime.
• The respondents sought to justify the provisional attachment as a protective measure in revenue interest.

Hon’ble High Court’s Observations & Decision

• The Court further took note of the fact that petitioner had already given representation to the tax authorities and it was informed that the reversal amount as claimed had already been claimed. No other claim has been made as against the petitioner nor any notice under Section 74 of the Act has been issued.
• The Court observed that freezing of bank accounts in the absence of statutory proceedings has grave civil consequences, particularly where the assessee is a running business.
• In these circumstances, the Court found that the action of freezing the accounts could not be permitted to continue.
• The Court recorded the petitioner’s willingness to furnish solvent security in the sum of ₹81.73 lakh.
• Accordingly, the Court stayed the provisional freezing of the petitioner’s bank accounts.