Facts of the Case

Three connected writ petitions -- by Bharat Parihar, Kishan Lal Bunkar, and Sunbright Designers Pvt. Ltd. -- challenged provisional attachment of their bank accounts under Section 83 of the CGST Act, 2017. In the lead matter, the bank account of the petitioner with Yes Bank was provisionally attached on 21st April 2022, and its continuation was communicated afresh on 19th April 2023, after the petitioner's objections under Rule 159(5) of the CGST Rules were disposed of. The petitioner in the third connected petition, based in Chennai, was alleged to be a beneficiary of fraudulently claimed GST refunds and challenged the attachment additionally on the ground that neither he nor his bank account was located within Maharashtra.

Issues Involved

  1. Whether an order disposing of objections to provisional attachment under Rule 159(5) is an appealable order barring writ jurisdiction.
  2. Whether a provisional attachment under Section 83 continues to operate beyond one year from the original order in the absence of a fresh order.
  3. Whether the Commissioner has jurisdiction under Section 83 read with Section 122(1-A) to attach the bank account of a person situated outside the State.

Petitioner's Arguments

  • Relying on Radha Krishan Industries vs State of Himachal Pradesh, the petitioners argued that an order disposing of objections to provisional attachment is not appealable and writ jurisdiction under Article 226 is the only available remedy.
  • Section 83(2) provides that provisional attachment ceases to have effect after one year from the date of the original order; since the attachment order dated 21st April 2022 was never followed by a fresh, formal order, it had lapsed by 21st April 2023 and the subsequent communication dated 19th April 2023 was merely administrative, not a fresh order.
  • In the third petition, it was contended that since both the petitioner and the bank account were located in Chennai, the Maharashtra GST authorities lacked territorial jurisdiction to attach the account.

Respondent's Arguments

  • The order disposing of objections was appealable under Section 107 and the writ petition should not be entertained.
  • A fresh order had in fact been passed, as noted on the internal order sheet, and the letter dated 19th April 2023 was only a communication to the bank reflecting that fresh order, relying on Shrimati Priti Amrutlal Gandhi vs State of Gujarat.
  • Section 83(1) read with Section 122(1-A) empowers the Commissioner to attach the property of 'any person' who is a beneficiary of a tax-evasion transaction, without territorial restriction, since the CGST Act operates throughout the country.

Court Order / Findings

  • Following Radha Krishan Industries, the Court held the Revenue could not take a position contrary to the binding Supreme Court decision that an order on objections to provisional attachment is not appealable, and entertained the writ petitions.
  • A provisional attachment under Section 83 automatically ceases to have effect after one year from the date of the original order by operation of Section 83(2); mere internal file notings or a communication to the bank, without a fresh, formal order served on the affected person, cannot extend or revive the attachment.
  • The order sheet relied upon by the Revenue was dated the same day as the original 2022 order and did not constitute a fresh order for 2023; the attachment was therefore held to have lapsed and the 19th April 2023 communication was quashed.
  • On jurisdiction, the Court held Section 83(1) read with Section 122(1-A) empowers action against 'any person,' including a non-taxable beneficiary located outside the attaching authority's home State, since the CGST Act is a nationwide statute.

Important Clarification

  • A provisional bank account attachment under Section 83 of the CGST Act lapses automatically on expiry of one year from the date of the original order; continuation requires a fresh, formal order communicated to the affected person, and mere internal noting or a bank communication referencing the old order will not suffice. Separately, Section 83 read with Section 122(1-A) permits attachment of a beneficiary's property even where that person is situated outside the attaching Commissionerate's home State.

Sections Involved

  • Section 83, CGST Act, 2017 - provisional attachment to protect revenue, ceasing after one year from the date of the order.
  • Section 122(1-A), CGST Act, 2017 - penalty on persons who retain the benefit of specified fraudulent transactions.
  • Rule 159(5), CGST Rules, 2017 - procedure for objections to provisional attachment.

Decision – In Favour of

The writ petitions were allowed in favour of the Assessee on the lapse of the provisional attachment, while the Court simultaneously upheld the Revenue's jurisdiction to attach accounts of out-of-State beneficiaries as a matter of law.

Case Details

Court: High Court of Judicature at Bombay
Case No.: Writ Petition No.3742 of 2023 with Writ Petition Nos.3744 and 3905 of 2023
Coram: Justice G.S. Kulkarni and Justice Jitendra Jain
Date of Order: 30.06.2023 (reserved on 19.06.2023)

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