Facts of the Case

The petitioner challenged a provisional attachment order issued under Section 83 of the Central Goods and Services Tax Act, 2017, whereby her bank account maintained with ICICI Bank was attached.

The attachment order was originally passed on 27.01.2022. The petitioner contended that despite the lapse of time, the account continued to remain under restriction without issuance of any fresh attachment order.

Issues Involved

  1. Whether a provisional attachment under Section 83 CGST Act continues beyond one year.
  2. Whether the authorities can restrict operation of a bank account after expiry of the statutory period without issuing a fresh attachment order.

Relevant Legal Provision

Section 83 – Central Goods and Services Tax Act, 2017

  • Provides for provisional attachment of property/bank accounts to protect revenue.
  • Section 83(2): Such attachment ceases to have effect after one year from the date of the order.

Petitioner’s Arguments

  • The provisional attachment order dated 27.01.2022 had exceeded the statutory period of one year.
  • As per Section 83(2), the attachment automatically ceased to have effect after expiry of one year.
  • Continued restriction on the bank account was illegal in absence of any fresh attachment order.

Respondent’s Arguments

  • The respondent acknowledged that the provisional attachment order was indeed issued on 27.01.2022.
  • It was also conceded that no fresh attachment order had been issued thereafter.

Court’s Findings

  • The Court relied on the clear mandate of Section 83(2) CGST Act, which limits the validity of provisional attachment to one year.
  • Since no fresh order had been passed, the earlier attachment automatically lapsed.
  • Any continued restriction on the petitioner’s bank account was held to be unsustainable in law.

Court Order

  • The writ petition was allowed.
  • The Court held that the provisional attachment ceased to have effect after one year.
  • The respondent bank was directed to:
    • Immediately permit operation of the petitioner’s bank account
    • Remove all restrictions imposed solely based on the expired attachment order 

Important Clarification

  • Provisional attachment under Section 83 is time-bound and cannot be extended indefinitely.
  • Authorities must issue a fresh attachment order if they intend to continue restrictions.
  • Banks cannot continue freezing accounts based on expired attachment orders.

Link to download the order -    https://delhihighcourt.nic.in/app/showFileJudgment/SAS24052024CW74682024_163424.pdf 

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