Facts of the Case

The petitioner, Vaibhav Singhal, challenged a provisional attachment order issued under Section 83 of the CGST Act, whereby his bank account maintained with AU Small Finance Bank was attached on 27.01.2022.

The petitioner contended that the attachment continued beyond the statutory period prescribed under Section 83(2), which limits the validity of such attachment to one year from the date of the order.

Issues Involved

  1. Whether a provisional attachment under Section 83 of the CGST Act can continue beyond one year without issuance of a fresh order?
  2. Whether the continued restriction on the petitioner’s bank account after expiry of one year is legally sustainable?

Petitioner’s Arguments

  • The petitioner argued that as per Section 83(2) of the CGST Act, any provisional attachment automatically ceases after one year from the date of the order.
  • Since the attachment order dated 27.01.2022 was not renewed or reissued, the continued freezing of the bank account was unlawful.
  • The petitioner sought immediate restoration of banking operations.

Respondent’s Arguments

  • The respondents conceded that:
    • The provisional attachment order was indeed issued on 27.01.2022.
    • No fresh or subsequent attachment order had been passed after expiry of one year. 

Court Findings / Order

The Delhi High Court held:

  • The provisional attachment order ceased to have effect after one year in terms of Section 83(2) of the CGST Act.
  • Since no fresh order was issued, the continuation of the attachment was invalid.

Directions Issued

  • The respondent bank was directed to:
    • Immediately allow operation of the petitioner’s bank account.
    • Remove any embargo imposed solely based on the expired attachment order.

Important Clarification

  • Provisional attachment under Section 83 is time-bound and self-limiting.
  • After one year, the attachment automatically lapses, unless a fresh order is passed in accordance with law.
  • Authorities cannot continue restrictions informally or without statutory backing.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/SAS24052024CW74732024_164033.pdf  

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