Writ Petition No.24036 of 2023

Facts of the Case

By order dated 05.01.2021, the third respondent provisionally attached three bank accounts and an immovable property belonging to the petitioners under Section 83 of the CGST Act, 2017. Under Section 83(2), such a provisional attachment has a life of only one year unless extended, and would therefore have lost efficacy from 05.01.2022. After the expiry of one year, the petitioners approached the concerned banks and the Sub-Registrar, Bowenpally; while HDFC Bank and Kotak Mahindra Bank permitted the petitioners to operate their accounts, ICICI Bank, Charminar Branch, and the Sub-Registrar did not accede to the petitioners' written request dated 18.08.2023, leading to the present writ petition before the Telangana High Court.

Issues Involved

  1. Whether the provisional attachment order dated 05.01.2021 ceased to have effect by operation of Section 83(2) after one year, in the absence of any extension.
  2. Whether the bank and the Sub-Registrar were obliged to release the property and accounts once the statutory period had lapsed.

Petitioner's Arguments

  • Counsel submitted that under Section 83(2), a provisional attachment order remains in force for only one year from the date of the order, unless extended, and that since the order dated 05.01.2021 had never been extended, its efficacy had lapsed with effect from 05.01.2022.
  • It was submitted that despite this, ICICI Bank and the Sub-Registrar continued to restrict the petitioners' dealings with the attached account and property even after a written request dated 18.08.2023.

Respondent's Arguments

  • On instructions, counsel for the Department confirmed to the Court, on a query raised at a previous hearing, that the provisional attachment order had neither been further extended nor had any fresh attachment order been passed.

Court Order / Findings

  • Taking into consideration the Department's own confirmation that no extension or fresh attachment had been made, and the express language of Section 83(2), the Court held that the provisional attachment order dated 05.01.2021 had lost its efficacy with effect from 05.01.2022 by efflux of time and ceased to be in operation any further.
  • The Court disposed of the writ petition accordingly, without costs, leaving it to the concerned authorities — the bank and the Sub-Registrar — to take appropriate action in light of this finding.

Important Clarification

  • A provisional attachment under Section 83 automatically ceases to have legal effect on the expiry of one year from the date of the order unless the Commissioner extends it within that period — no separate order of the Court is needed to "lift" it once the statutory period has run out, but affected banks and registering authorities may still require judicial confirmation before releasing the asset.
  • Departmental confirmation that no extension order exists is often decisive in such proceedings, since it leaves no factual dispute for the Court to resolve beyond applying the statutory time-bar.
  • A taxpayer facing continued restriction on an account or property despite the one-year period having lapsed need not wait for the department to act; a writ petition seeking a declaration that the order has ceased to operate, directed against the recalcitrant third party (here, a bank and a Sub-Registrar), is an appropriate and efficient remedy.

Sections Involved

  • Section 83, CGST Act, 2017 — provisional attachment of property, including bank accounts and immovable property, to protect revenue during the pendency of certain specified proceedings.
  • Section 83(2), CGST Act, 2017 — provides that a provisional attachment order ceases to have effect after one year from the date of the order, absent extension.
  • Article 226, Constitution of India — invoked to seek a declaration that the attachment had lapsed and consequential directions to the bank and Sub-Registrar.

Decision – In Favour of

The decision is in favour of the assessees, with the Court holding that the provisional attachment order had lost its efficacy by efflux of time and directing the authorities to act accordingly.

Case Details

Court: High Court for the State of Telangana at Hyderabad
Case Number: Writ Petition No.24036 of 2023
Coram: Hon'ble Sri Justice P. Sam Koshy and Hon'ble Sri Justice Laxmi Narayana Alishetty
Date of Order: 05.09.2023

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