Facts of the Case

Mahakali Enterprises, through its proprietor Rakesh Mathursingh Thakor, challenged the legality and validity of a provisional attachment of its bank account, passed by the Commissioner, CGST, Gandhinagar on 02.11.2020 in Form GST DRC-22. Although the statutory one-year life of the attachment had expired by the time the matter reached the Gujarat High Court, the concerned bank — IDFC First Bank, Rakhiyal Branch, Ahmedabad — continued to restrain operation of the account, since the department had not communicated to the bank that the attachment had lapsed. The petitioner accordingly approached the High Court under Article 226 seeking release of the bank account.

Issues Involved

  1. Whether a provisional attachment order under Form GST DRC-22 continues to bind a bank after expiry of its statutory one-year life, absent a fresh order.
  2. Whether the department is obligated to proactively inform the bank when a provisional attachment ceases to operate.

Petitioner's Arguments

  • The provisional attachment order dated 02.11.2020 had, on its face, outlived its statutory life of one year and was no longer in force as on the date of hearing.
  • Despite this, the bank continued to deny the petitioner operation of its account, causing serious prejudice, since it was awaiting formal instructions from the department.

Respondent's Arguments

  • The learned ASG appearing for the Union of India did not dispute that the attachment had lapsed by efflux of time, and the matter proceeded largely on the practical difficulty of communication between the department and the bank.

Court Order/Findings

  • The Court noted a recurring practical problem: banks await formal instructions from the GST department before permitting account holders to resume operating attached accounts, even after the statutory attachment period has expired.
  • It held that the impugned order of provisional attachment in Form GST DRC-22 dated 02.11.2020 "cannot be said to be in force or operation as on date as it has outlived its statutory life of one year," and directed IDFC First Bank, Rakhiyal Branch, Ahmedabad, to permit the petitioner to operate its bank account.
  • The order was made without prejudice to the Commissioner's liberty to proceed further with any inquiry against the petitioner in accordance with law, if a case is made out.
  • The Court requested the learned ASG to communicate to all GST departments that once the statutory period of a provisional attachment order expires without a fresh order, the department is obliged to proactively inform the bank and permit resumption of account operations, so that dealers are not compelled to approach the High Court each time this administrative lapse occurs.

Important Clarification

  • A provisional attachment under Form GST DRC-22 automatically ceases to have effect on expiry of one year from the date of the order, without requiring any further order of revocation by the taxpayer or the Court.
  • Banks and departments cannot continue to treat a lapsed attachment as operative merely because no formal communication of expiry has been received; the department is expected to proactively inform banks once the statutory period lapses.

Sections Involved

  • Section 83, CGST Act, 2017 — empowers provisional attachment of property, including bank accounts, to protect revenue, and prescribes that such attachment ceases to have effect after one year from the date of the order (Form GST DRC-22 being the prescribed form for such attachment).
  • Article 226, Constitution of India — invoked to seek release of the bank account from an attachment that had outlived its statutory life.

Decision – In Favour of

In favour of the Assessee. The Court directed the bank to release the account, holding the provisional attachment to be no longer in force, while preserving the department's liberty to pursue any fresh inquiry in accordance with law.

Related Case Laws

No related case laws are available on this site at present for cross-reference on this specific point.

Case Details

  • Court: High Court of Gujarat at Ahmedabad
  • Case No.: R/Special Civil Application No. 6482 of 2022
  • Coram: Hon'ble Mr. Justice J.B. Pardiwala and Hon'ble Ms. Justice Nisha M. Thakore
  • Date of Order: 6 April 2022

Link to Download the Order

Download the full judgment (PDF)

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