The Gujarat High Court in the case of Arya Metacast Pvt. Ltd. Versus State of Gujarat has held that the provisional attachment should not hamper normal business activities of the taxable person.

The court relied on the decision of the Gujarat High Court in the case of Valerius Industries Vs. Union of India , in which it was held that the power of provisional attachment under section 83 of the Gujarat Goods and Services Tax Act, 2017 should be exercised by the authority only if there is reasonable apprehension that the assessee may default on the ultimate collection of the demand that is likely to be raised on completion of the assessment. It should therefore be exercised with extreme care and caution.

The Court ruled that the power granted under Section 83 of the Gujarat Goods and Services Tax Act, 2017 should not be used to harass the assessee, nor should it be used in a way that could have an irreversible negative impact on the assessee’s business.

The court quashed the order of the provisional attachment qua the stock of goods, two demat accounts as well as the current account of the writ applicants.


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