Facts of the Case

The petitioner, M/S Gujral Sons, challenged fresh provisional attachment orders in Form GST DRC-22 dated 03.02.2026, attaching its bank accounts, after an initial provisional attachment order dated 13.12.2024 had lapsed by operation of Section 83(2) upon expiry of its statutory one-year life. By the time of the second attachment, the assessment against the petitioner was already complete, culminating in an order dated 28.12.2025 against which the petitioner was in the process of filing an appeal.

Issues Involved

  1. Whether the department can issue a fresh provisional attachment order under Section 83 on the same facts and grounds after the initial attachment has lapsed by expiry of the one-year period under Section 83(2).
  2. What is the interplay between provisional attachment as a pre-emptive protective measure and the department's other recovery mechanisms once assessment is complete?

Petitioner's Arguments

  • The petitioner argued that the second provisional attachment, issued on essentially the same factual matrix as the first, was not sustainable because there was no change in circumstances or new facts justifying a fresh exercise of power under Section 83, and that a second attachment on the same grounds effectively nullified the statutory one-year limit under Section 83(2).
  • Heavy reliance was placed on the Supreme Court's ruling in Kesari Nandan Mobile v. Office of Assistant Commissioner of State Tax (2025) 33 Centax 224 (S.C.), particularly paragraphs 30 to 32, holding that the draconian power under Section 83(1) cannot be renewed after lapse under Section 83(2) without rendering that safeguard a dead letter, and that provisional attachment is a pre-emptive measure, not a substitute for recovery mechanisms once a final demand has crystallised.

Respondent's Arguments

  • The Revenue's position, discernible from the record, was that the assessment had by then concluded with an Order-in-Original, and the department sought to sustain the fresh attachment as a continuing protective measure pending the petitioner's appeal.

Court Order / Findings

  • The Court, following the Supreme Court's ruling in Kesari Nandan Mobile, held that conceding power to the Revenue to issue a fresh provisional attachment order after the initial order has lapsed by operation of law, on substantially the same grounds, would render Section 83(2)'s safeguard a dead letter — akin to "filling old wine in a new bottle" — and that the age-old principle that what cannot be done directly cannot be done indirectly applies in full force.
  • The Court found no change in circumstances between the first (lapsed) attachment and the second, the only reason for the gap being the Revenue's own failure to complete proceedings within the first attachment's one-year life.
  • The Court further noted that once assessment culminates in an Order-in-Original, the Revenue must resort to the statutory recovery provisions (which also afford the assessee a right of appeal) rather than short-circuiting the process through renewed provisional attachment, which is meant only as a pre-emptive measure during investigation, not as a recovery tool.
  • The impugned second provisional attachment order was held unsustainable and the petition was allowed in terms of the prayer clauses seeking quashing of the attachment and defreezing of the bank accounts.

Important Clarification

Once a provisional attachment order under Section 83(1) of the CGST Act lapses after the statutory one-year period prescribed by Section 83(2), the department cannot issue a fresh provisional attachment order on substantially the same facts and grounds merely because it failed to conclude its investigation or proceedings in time. Doing so would defeat the legislative safeguard built into Section 83(2), and once assessment culminates in a final order, provisional attachment (a pre-emptive measure) must give way to the statutory recovery mechanisms, which also protect the assessee's right of appeal.

Sections Involved

  • Section 83(1), CGST Act, 2017 — empowers provisional attachment of property, including bank accounts, during pendency of specified proceedings, to protect government revenue.
  • Section 83(2), CGST Act, 2017 — provides that a provisional attachment order ceases to have effect after the expiry of one year from the date of the order.
  • Form GST DRC-22 — the prescribed form for a provisional attachment order under Section 83.

Decision – In Favour of

The decision is in favour of the Assessee. The second provisional attachment order was quashed and the bank accounts ordered defreezed.

Case Details

Court: High Court of Delhi at New Delhi
Case No.: W.P.(C) 4374/2026
Coram: Justice Nitin Wasudeo Sambre and Justice Ajay Digpaul
Date of Order: 24.04.2026

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