Facts of the Case

  • The Petitioners’ bank accounts were provisionally attached by the GST authorities through orders dated 10th September 2020 and 11th September 2020.
  • The Petitioners approached the High Court seeking release/de-freezing of their bank accounts.
  • The Respondent department clarified that:
    • No fresh DRC-22 notices had been issued.
    • Proceedings under Section 74 of the Delhi GST Act had been initiated.
  • It was admitted that no fresh attachment order was passed after the initial attachment orders.

Issues Involved

  1. Whether a provisional attachment under Section 83 CGST Act continues beyond one year without fresh orders.
  2. Whether the bank accounts of the Petitioners could remain frozen despite expiry of the statutory period.

Petitioner’s Arguments

  • The provisional attachment orders had ceased to be valid after one year as per Section 83(2) CGST Act.
  • No fresh attachment order had been issued, hence continuation of freezing of bank accounts was illegal.
  • The Petitioners were entitled to immediate de-freezing of their accounts.

Respondent’s Arguments

  • The department submitted that no fresh DRC-22 notices were issued.
  • It was clarified that proceedings under Section 74 of the Delhi GST Act were ongoing.
  • However, the Respondents did not dispute that no fresh attachment order had been passed after the original orders. 

Court’s Findings / Order

  • The Court observed that under Section 83(2) CGST Act, a provisional attachment ceases to have effect after one year from the date of the order.
  • Since no fresh attachment order had been issued, the earlier attachment orders were no longer valid or enforceable.
  • The Court directed the Respondents to de-freeze the bank accounts within three days.
  • The writ petitions were accordingly disposed of.

Important Clarification by Court

  • Provisional attachment is not indefinite and strictly governed by statutory timelines.
  • After expiry of one year, attachment automatically lapses unless renewed by fresh order.
  • Authorities cannot continue restrictions without legal backing.

 Link to download the order -  https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:880-DB/MMH08032022CW36962022_184650.pdf

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