Supreme Court Issues Notice in Murliwala Pigment Case: GST Sealing and Provisional Attachment Powers Under Judicial Lens

Overview of the Matter

The Hon'ble Supreme Court of India has issued notice in a Special Leave Petition filed by M/s Murliwala Pigment, a registered dealer under the Rajasthan Goods and Services Tax Act, 2017, challenging the simultaneous sealing of four business premises and provisional attachment of bank accounts carried out by the Directorate General of GST Intelligence (DGGI), Jaipur Zonal Unit. The petition arose after the Rajasthan High Court declined to intervene, citing availability of statutory remedies and alleged non-cooperation by the assessee. The Supreme Court's prima facie observations in this matter carry considerable significance for the interpretation of Section 67(4) and Section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act).

Background Facts

On March 10, 2026, the DGGI, Jaipur Zonal Unit, simultaneously conducted search operations at five premises connected with M/s Murliwala Pigment, exercising powers under Section 67(2) of the CGST Act. In the course of these operations:

  • Goods present at various locations were seized.
  • Four business premises were sealed by the authorised officers.
  • Vide an order dated March 12, 2026 (DRC-22), the bank accounts of the assessee were provisionally attached under Section 83 of the CGST Act, ostensibly to protect Government revenue.

Subsequently, summons were issued to the assessee on March 14, 2026 and again on March 18, 2026 under Section 70 of the CGST Act. The assessee responded in writing on March 18, 2026 and March 23, 2026 respectively, and also submitted a formal representation against the provisional bank account attachment. However, the assessee did not appear personally before the authorities to tender evidence or produce documents.

Crucially, no Show Cause Notice had been issued to the assessee as of the date of the hearing before the Supreme Court.

Aggrieved by both the sealing and the attachment, the assessee approached the Rajasthan High Court by filing D.B. Civil Writ Petition No. 5848/2026. The High Court dismissed the petition vide judgment dated April 20, 2026, whereupon the assessee preferred the present Special Leave Petition (C) No. 17943 of 2026 before the Supreme Court.

Core Issue for Determination

Whether the sealing of business premises under Section 67(4) of the CGST Act and the provisional attachment of bank accounts under Section 83 of the CGST Act, carried out in the absence of any denial of access and without issuance of a Show Cause Notice, are legally sustainable so as to warrant interim relief by way of de-sealing?

Contentions Raised by the Assessee

The assessee advanced three principal arguments before the Supreme Court:

1. Section 67(4) — Sealing Requires Denial of Access

Section 67(4) of the CGST Act permits an authorised officer to seal premises or break open any almirah, electronic device, box, or receptacle only where access to such premises or receptacle has been denied. In the present case, access was never denied by the assessee. Consequently, the statutory pre-condition for invoking the sealing power was entirely absent, rendering the action of sealing the four premises legally unsustainable.

2. Section 83 — Attachment Without Tangible Material

The provisional attachment of the assessee's bank accounts under Section 83 of the CGST Act was carried out mechanically and routinely, without any tangible material on record to justify such a drastic step. It was contended that such use of the attachment power amounts to an abuse of authority.

3. Absence of Show Cause Notice

No Show Cause Notice had been issued to the assessee as required for initiating adjudicatory proceedings under the CGST Act. The assessee placed reliance on: