Facts of the Case

The petitioners challenged a letter dated 07 December 2020 issued under Section 83 of the CGST Act, whereby their bank accounts and immovable properties were provisionally attached by the GST authorities. The petitioners sought relief for de-freezing of their bank accounts and release of attached immovable properties.

During proceedings, it was disclosed that:

  • A show cause notice dated 15 July 2021 under Section 74 CGST Act had been issued proposing penalty.
  • Fresh DRC-22 notices were issued to debit freeze bank accounts for ₹25,000 each to secure penalty under Section 122(3).

Issues Involved

  1. Whether provisional attachment under Section 83 CGST Act could continue without reasonable limitation.
  2. Whether the petitioners were entitled to de-freezing of bank accounts and release of immovable properties.
  3. Whether limited debit freezing could sufficiently protect revenue interests.

Petitioner’s Arguments

  • The provisional attachment of bank accounts and immovable properties was excessive and arbitrary.
  • The petitioners were willing to secure the alleged liability to a reasonable extent without prejudice to their rights.
  • Requested permission to use funds beyond the secured amount in their bank accounts.

Respondent’s Arguments

  • The department justified the action based on:
    • Issuance of show cause notice under Section 74.
    • Imposition of penalty under Section 122(3).
  • Argued that debit freezing of ₹25,000 per petitioner was necessary to secure revenue interests.

Court’s Findings / Order

The Delhi High Court adopted a balanced approach and held:

  • Bank accounts shall remain debit frozen only to the extent of ₹25,000 per petitioner.
  • Petitioners are allowed to utilize funds exceeding ₹25,000 in their accounts.
  • Immovable properties shall be released/de-freezed within three days.
  • The arrangement is subject to final outcome of the show cause proceedings.
  • The writ petition was disposed of with directions.

Important Clarification by the Court

  • Provisional attachment under Section 83 CGST Act must be proportionate.
  • Authorities cannot impose excessive restrictions beyond what is necessary to secure revenue.
  • Courts may allow partial relief through limited debit freeze instead of complete attachment.

Link to download the order -  https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:879-DB/MMH08032022CW36592022_184523.pdf

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