Facts of the Case

The petitioners, namely C. Kluster Exportrade Pvt. Ltd., Amal Overseas Pvt. Ltd., Parees Overseas Pvt. Ltd., Ninad Overseas Pvt. Ltd., Meticulous Overseas Pvt. Ltd., and Ekon Crystalmerchants Pvt. Ltd., challenged the provisional attachment of their bank accounts ordered under Section 83(1) of the Central Goods and Services Tax Act, 2017 (CGST Act).

The impugned provisional attachment orders were passed on 1 February 2021. The petitioners contended that these attachment orders could not legally continue beyond the statutory period of one year. During the hearing, the respondents informed the Court that the earlier attachment had already lapsed by operation of law and that fresh provisional attachment orders had been issued separately. The petitioners also complained that the Customs Department had blocked their export incentives without granting an opportunity of hearing.

 Issues Involved

  1. Whether a provisional attachment order issued under Section 83(1) of the CGST Act, 2017 remains valid beyond one year.
  2. Whether the earlier provisional attachment order could continue after expiry of the statutory period.
  3. Whether the petitioners were entitled to challenge any fresh provisional attachment orders independently.
  4. Whether the petitioners could seek release of export incentives blocked by the Customs Department through appropriate representation.

 Petitioner’s Arguments

  • The petitioners submitted that the provisional attachment order dated 1 February 2021 had ceased to have legal effect after completion of one year.
  • It was argued that Section 83 does not permit continuation of provisional attachment beyond the prescribed statutory period.
  • The petitioners further submitted that the Customs Department had blocked their export incentives without providing them any opportunity of hearing and sought appropriate directions from the Court.

 Respondent’s Arguments

  • The respondents fairly conceded before the Court that by operation of the statute, the provisional attachment order automatically stood lapsed after one year.
  • The respondents further informed the Court that fresh provisional attachment orders had already been issued wherever considered necessary.
  • It was submitted that if the petitioners were aggrieved by such fresh attachment orders, they could pursue appropriate legal remedies.

 Court Order / Findings

The Bombay High Court disposed of the writ petitions with the following findings:

  • A provisional attachment order issued under Section 83(1) of the CGST Act cannot survive beyond one year.
  • The provisional attachment order dated 1 February 2021 stood automatically lapsed by legal fiction after expiry of one year.
  • Since fresh provisional attachment orders had reportedly been issued, the parties were granted liberty to initiate appropriate proceedings in accordance with law.
  • Regarding the grievance relating to blocked export incentives, the Court permitted the petitioners to submit an application or representation before the competent authority.
  • The concerned authority was directed to decide such representation preferably within four weeks from the date of receipt.
  • The writ petitions were accordingly disposed of without costs.

 Important Clarification

  • Section 83 provisional attachment is temporary in nature and automatically ceases after one year.
  • Expiry of the original attachment does not prevent the department from issuing a fresh provisional attachment order, if otherwise permissible under law.
  • Any fresh attachment order constitutes a separate cause of action and may be challenged independently.
  • Authorities should consider representations regarding blocked export incentives expeditiously in accordance with law.

 Sections Involved

  • Section 83(1), Central Goods and Services Tax Act, 2017 – Provisional Attachment to Protect Revenue in Certain Cases.

Link to download the order –https://mytaxexpert.co.in/uploads/1783925109_4022compressed.pdf

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