Provisional attachment of bank account under Section 83 of the MGST Act, 2017 and wrongful availment of ITC under Section 17(5)(d): BOMBAY HIGH COURT

GOISU REALTY PVT. LTD. vs. STATE OF MAHARASHTRA & ORS.

Court: Bombay High Court
Case Number: WRIT PETITION (L) NO. 3275 OF 2025
Judgment Date: January 31, 2025
Judges: Justice B.P. Colabawalla & Justice Firdosh P. Pooniwalla
Legal Issue: Provisional attachment of bank account under Section 83 of the MGST Act, 2017 and wrongful availment of ITC under Section 17(5)(d)

Summary of the Case: GOISU REALTY PVT. LTD. vs. STATE OF MAHARASHTRA & ORS.

1. Issue in Dispute

  • The Maharashtra GST Department provisionally attached the bank account of GOISU Realty Pvt. Ltd. under Section 83 of the MGST Act, 2017, citing wrongful availment of Input Tax Credit (ITC) under Section 17(5)(d).
  • The department argued that the petitioner wrongly availed ₹151 Cr. of ITC for real estate development and had to reverse the ITC.

2. Petitioner’s Arguments

  • The attachment was arbitrary and lacked material justification.
  • ITC was valid as per the Safari Retreats Supreme Court Judgment (2024), which upheld the functionality test for ITC.
  • If the property is sold before the Occupancy Certificate (OC), GST will be applicable, making ITC valid.
  • The attachment harmed business operations, preventing vendor payments and disrupting investments.

3. Court’s Findings & Judgment

  • Provisional attachment under Section 83 is a severe action and must be based on tangible evidence.
  • The department failed to provide material proof that GOISU Realty intended to defeat tax recovery.
  • The attachment was deemed unjustified and a misuse of power.
  • The court set aside the attachment order and directed the immediate release of the bank account.
  • The petitioner agreed to inform the department three months in advance if they plan to utilize ITC.

Key Takeaways

✔ Provisional attachment must be based on concrete evidence, not assumptions.
✔ ITC on real estate remains a disputed area, requiring further clarity from legislation or courts.
✔ Businesses should maintain strong legal justifications for ITC claims.
✔ GST authorities must exercise their powers fairly and within legal limits.