The Court held that the power of provisional attachment is draconian in nature and the conditions prescribed by the statute must be strictly fulfilled, finding a complete absence of cogent material for its exercise.
The Bombay High Court has quashed the provisional attachment orders freezing multiple bank accounts of 1pay Mobileware Pvt. Ltd. — an RBI-authorised payment aggregator — passed by the DGGI under Section 83 of the CGST Act during an investigation into an alleged online money gaming syndicate. [1pay Mobileware Private Limited v. Union of India & Ors.]
Justices M.S. Karnik and the bench held that there was a clear non-application of mind by the Joint Commissioner to the provisions of Section 83. The Court observed that the opinion for attachment was based completely on suspicion and there was a complete absence of cogent and credible material for exercising the draconian power of provisional attachment.
Relying on the Supreme Court's ruling in Radha Krishan Industries v. State of Himachal Pradesh, the Court reiterated that the formation of an opinion under Section 83(1) must be based on tangible material bearing on the necessity of ordering a provisional attachment for protecting government revenue. The petitioner — whose clients included the Government of Bihar, Mumbai University, ICAI, IRCTC, and MHADA — had its business put to what its counsel described as live financial death for eight weeks.
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