Facts of the Case

The petitioner, Vaibhav Singhal, challenged a provisional attachment order issued under Section 83 of the CGST Act. The order, dated 27.01.2022, resulted in the attachment of the petitioner’s bank account maintained with Kotak Mahindra Bank.

The petitioner contended that despite the lapse of a significant period, no fresh attachment order had been issued, and the continued restriction on the bank account was unlawful.

Issues Involved

  1. Whether a provisional attachment under Section 83 of the CGST Act remains valid beyond one year from the date of issuance.
  2. Whether the respondent authorities can continue restricting operation of a bank account without issuing a fresh attachment order.

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.
  • Since the attachment order was issued on 27.01.2022 and no fresh order was passed thereafter, the continuation of attachment was illegal.
  • The restriction on the bank account violated statutory provisions and caused undue hardship.

Respondent’s Arguments

  • The respondents conceded that the provisional attachment order was indeed issued on 27.01.2022.
  • It was also admitted that no subsequent or fresh attachment order had been passed after the expiry of one year.

Court’s Findings / Order

The Hon’ble Delhi High Court held that:

  • As per Section 83(2) of the CGST Act, a provisional attachment ceases automatically after one year from the date of the order.
  • Since no fresh attachment order was issued, the earlier attachment had no legal effect.
  • The continued restriction on the petitioner’s bank account was unjustified.

Order Passed:

  • The provisional attachment of the petitioner’s bank account was declared as having ceased to exist.
  • The bank was directed to immediately allow operation of the account without any restriction based on the expired attachment order.
  • The writ petition was allowed and disposed of accordingly.

Important Clarification

  • Provisional attachment under Section 83 is time-bound and not indefinite.
  • Authorities must issue a fresh attachment order if they intend to continue attachment beyond one year.
  • Any continuation without renewal is void and unenforceable in law.

Sections Involved

  • Section 83(1) – Power of provisional attachment
  • Section 83(2) – Validity limited to one year

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/SAS24052024CW74722024_163903.pdf

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