Facts of the Case:
In this case, the petitioner challenged the order dated 21.02.2025 passed by the respondent authority under Section 83 of the KGST/CGST Act, 2017, provisionally attaching the petitioner’s bank account. The petitioner contended that a previous provisional attachment order had already been issued on 21.02.2024, and as per Section 83(2) of the CGST/KGST Act, such attachment automatically ceases to have effect after expiry of one year. Therefore, the first attachment lapsed at midnight of 20.02.2025.
Despite the lapse, the respondent passed a fresh attachment order the very next day, i.e., 21.02.2025, re-attaching the same bank account. The petitioner argued that this second attachment order was without jurisdiction and directly contrary to the mandate of Section 83(2), which does not empower the authorities to “renew” or “re-issue” a provisional attachment after the lapse of one year.
The respondent justified the re-attachment on the ground that the investigation was still ongoing and that the power to protect government revenue continued under Section 83(1).
Issue: Whether a fresh or renewed provisional attachment order under Section 83(1) of the CGST/KGST Act, 2017 can be issued after the expiry of the initial one-year period, when the first attachment has already lapsed under Section 83(2).
Held that:
The High Court observed that first attachment order dated 21.02.2024 automatically ceased at midnight of 20.02.2025, by operation of Section 83(2). Hence, any subsequent order passed on 21.02.2025 was beyond statutory power. The Court emphasized that if Parliament intended to provide for renewal or extension, it would have expressly incorporated such provision, as seen in other tax statutes (like the Excise or Customs Acts). The authority cannot do indirectly what the law prohibits directly. Issuing successive attachments would defeat the intent of Section 83(2) and make it otiose.
The Court relied on the recent Supreme Court decision in Kesari Nandan Mobile v. Assistant Commissioner of State Tax (2), Enforcement Division–5, wherein the Apex Court categorically held that “Once the initial provisional attachment order ceases to have effect after expiry of one year under Section 83(2), the statute does not permit issuance of a second or renewed attachment order on the same grounds”.
The Court quashed the second provisional attachment order, holding it illegal, arbitrary, and without jurisdiction, and directed the authorities to release the petitioner’s bank account. The Court clarified that the department was free to pursue other proceedings permissible under the CGST Act, except Section 83.
Case Name: M/s. Heavy Steel Industry Versus Deputy Commissioner of Commercial Taxes (Audit) Bengaluru, Additional Commissioner of Commercial Taxes (Enforcement) Benagaluru, Commissioner of Commercial Taxes Bengaluru, Joint Commissioner of Commercial Taxes (Vigilance), Bengaluru dated 15.10.2025
To read the complete judgement 2025 Taxo.online 2799
