Facts of the Case

The Petitioner, Karamjit Jaiswal, challenged a letter dated 27 November 2020 issued by the Respondent authority directing provisional attachment of his immovable properties and bank accounts. The Petitioner sought defreezing of his accounts and release of attached properties.

The attachment was made under Section 83 of the CGST Act, 2017 during an inquiry against M/s Milkfood Ltd., in which the Petitioner held 34.79% shares. However, he was neither a director nor involved in day-to-day operations.

Additionally, the Petitioner argued that:

  • He was not a taxable person under Section 2(107) of the CGST Act.
  • He was not registered under the CGST Act.
  • A similar attachment of his daughter’s bank account had already been quashed earlier by the Court.

Further, it was highlighted that the provisional attachment order had expired after one year, i.e., on 27 November 2021.

Issues Involved

  1. Whether provisional attachment under Section 83 CGST Act, 2017 can continue beyond one year.
  2. Whether attachment can be sustained against a person who is not a taxable person.
  3. Whether attachment of personal assets is valid when the individual is not involved in company operations.

Petitioner’s Arguments

  • The Petitioner is not a taxable person under Section 2(107) of the CGST Act.
  • He is not registered under the CGST Act and thus cannot be subjected to such coercive action.
  • The attachment was unjustified as he was not involved in the management of M/s Milkfood Ltd.
  • The provisional attachment order had automatically lapsed after one year under Section 83.
  • No fresh attachment order had been issued after expiry.
  • Reliance was placed on earlier relief granted in a similar matter involving his daughter.

Respondent’s Arguments

  • The Respondent accepted that:
    • The attachment orders were not renewed.
    • No fresh attachment order had been passed.
  • However, it was submitted that a show-cause notice under Section 74 CGST Act had been issued.

Court’s Findings / Order

The Delhi High Court held that:

  • As per Section 83(1) of the CGST Act, a provisional attachment ceases to have effect after one year from the date of the order.
  • Since:
    • The attachment order dated 27 November 2020 had expired on 27 November 2021, and
    • No fresh attachment order was issued,

The continuation of attachment was illegal and unsustainable.

Direction Issued:

  • The Respondent was directed to:
    • Defreeze the Petitioner’s bank accounts, and
    • Release immovable properties within three days from the date of order.

Important Clarification

  • Provisional attachment under Section 83 is temporary and time-bound.
  • It automatically lapses after one year, unless renewed through a valid fresh order.
  • Authorities cannot continue attachment indefinitely without legal backing.

Sections Involved

  • Section 83, CGST Act, 2017 – Provisional Attachment
  • Section 74, CGST Act, 2017 – Determination of tax not paid or short paid
  • Section 2(107), CGST Act, 2017 – Definition of “Taxable Person”

Link to download the order -  https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:513-DB/MMH08022022CW24082022_131619.pdf

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