Facts of the Case

SPNN Business Services Pvt. Ltd. approached the Delhi High Court under Article 226, challenging provisional attachment orders dated 9th February, 2021 issued by the Commissioner of Central Tax (GST), Delhi South, in relation to an alleged difference in tax between the petitioner's GSTR-1 and GSTR-3B returns. During the pendency of the proceedings, and pursuant to an earlier order dated 5th March, 2021, the petitioner had deposited the original title deeds of five properties with the department in lieu of continued attachment. By the time the matter came up for hearing on 11th March, 2022, the petitioner had discharged the entire disputed tax liability together with applicable interest for the period up to December, 2020, and filed an affidavit to that effect before the Court.

Issues Involved

  1. Whether the provisional attachment orders survived once the petitioner had discharged the entire tax and interest liability underlying the GSTR-1/GSTR-3B mismatch.
  2. Whether the title deeds deposited by the petitioner in lieu of attachment were liable to be released consequent to full payment.

Petitioner's Arguments

  • The entire disputed liability arising from the difference between GSTR-1 and GSTR-3B returns, together with applicable interest, had been paid up to December, 2020.
  • Once full payment had been made, the provisional attachment orders dated 9th February, 2021 no longer served any purpose and the title deeds of the five properties deposited earlier ought to be released.

Respondent's Arguments

  • Counsel for the respondents admitted that the petitioner had discharged the entire liability along with applicable interest arising out of the GSTR-1/GSTR-3B differential up to December, 2020, and placed an affidavit to this effect on record.
  • In view of the full payment, the respondents admitted that the provisional attachment orders dated 9th February, 2021 had become infructuous.

Court Order / Findings

  • The Court accepted the respondents' statement that the entire payment had been made and held the department bound by it.
  • The provisional attachment orders were held to have become infructuous in view of the complete discharge of the tax liability with interest.
  • The writ petition and pending application were disposed of as satisfied.
  • The respondents were directed to release the original title deeds of the five properties deposited by the petitioner, in accordance with the earlier order dated 5th March, 2021, within three weeks.

Important Clarification

  • Provisional attachment under GST law is a protective measure tied to the pendency of a disputed liability; once the underlying tax and interest stand fully paid, the attachment loses its purpose and any security furnished in lieu of it (such as deposited title deeds) must be released.
  • Where the department itself concedes full payment through a formal affidavit, courts will readily hold the attachment infructuous and direct release of secured assets on a fixed timeline, without the need for adjudication on merits.

Sections Involved

  • Section 83, CGST Act 2017 — empowers provisional attachment of property, including bank accounts, to protect revenue during pendency of proceedings.
  • GSTR-1 and GSTR-3B — the outward supply statement and summary return whose mismatch formed the basis of the disputed liability and attachment.

Decision – In Favour of

Disposed of as satisfied, in favour of the Assessee — the provisional attachment was held infructuous and the deposited title deeds were directed to be released, following the petitioner's full payment of tax and interest.

Related Case Laws

  • Posts on Section 83 CGST Act provisional attachment and its release upon payment on this site.
  • Related posts on GSTR-1/GSTR-3B mismatch proceedings and attachment of bank accounts.

Case Details

  • Court: High Court of Delhi at New Delhi
  • Case No.: W.P.(C) 2435/2021 & CM APPL.7083/2021
  • Coram: Hon'ble Mr. Justice Manmohan and Hon'ble Mr. Justice Sudhir Kumar Jain
  • Date of Order: 11.03.2022

Link to Download the Order

https://mytaxexpert.co.in/uploads/1787067364_4503compressed.pdf

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