Facts of the Case

The petitioner, Vaibhav Singhal, challenged the provisional attachment order issued under Section 83 of the Central Goods and Services Tax Act, 2017, whereby his bank account maintained with Yes Bank Ltd. was attached.

The attachment order was originally issued on 27.01.2022. The petitioner contended that despite the lapse of more than one year, no fresh attachment order had been issued, yet the bank account continued to remain under restriction. 

Issues Involved

  1. Whether a provisional attachment under Section 83 of the CGST Act, 2017 continues beyond one year without renewal.
  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, a provisional attachment automatically ceases to have effect after one year from the date of the order.
  • Since the attachment order was passed on 27.01.2022, it expired on 26.01.2023.
  • No fresh order of attachment had been issued thereafter.
  • Therefore, continuation of the attachment and restriction on the bank account was illegal and without authority of law.

Respondent’s Arguments

  • The respondent (GST Department) conceded that:
    • The provisional attachment order was indeed issued on 27.01.2022.
    • No fresh attachment order had been issued thereafter. 

Court’s Findings / Order

The Hon’ble Court held:

  • In view of Section 83(2) of the CGST Act, the provisional attachment automatically ceases after one year from the date of the order.
  • Since no fresh attachment order was issued, the earlier attachment stood expired.

Final Directions

  • The provisional attachment of the petitioner’s bank account was declared non-operative.
  • The respondent bank was directed to:
    • Allow immediate operation of the bank account, and
    • Remove all restrictions imposed solely on the basis of the expired attachment order. 

Important Clarification

  • The judgment reinforces that provisional attachment is time-bound.
  • Authorities cannot continue attachment beyond one year unless a fresh order is passed in accordance with law.
  • Banks must not continue restrictions once the statutory period lapses.

Sections Involved

  • Section 83, Central Goods and Services Tax Act, 2017
    • Provisional attachment to protect revenue
  • Section 83(2), CGST Act, 2017
    • Attachment ceases after one year

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/SAS24052024CW73822024_162030.pdf 

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