Facts of the case:

In this case, the petitioner was engaged in trading of gold, silver, diamonds and jewellery. On 09.03.2022, officers of the State Tax Department conducted a search under Section 67(2) of the CGST Act, 2017 at the petitioner’s registered business premises. Pursuant to the search, a panchanama dated 09.03.2022 was drawn. On the very next day, i.e. 10.03.2022, the respondent authorities passed an order of provisional attachment under Section 83 of the CGST Act in Form GST DRC-22, attaching the petitioner’s bank accounts 

Subsequently, on 14.03.2022, during the continuation of search proceedings, the authorities seized gold mixed with other metals and cash and issued an order of seizure in Form GST INS-02. Despite being aware of the alleged magnitude of evasion, the department did not issue any notice within six months of seizure as mandated under Section 67(7), nor any order extending the period of six months as contemplated under the proviso to Section 67(7).  Likewise, though Section 83(2) clearly provides that provisional attachment ceases to have effect after one year, no fresh attachment order was passed after expiry of the statutory period.

Issue:

Whether provisional attachment of bank accounts can lawfully continue beyond the one-year period prescribed under Section 83(2) of the CGST Act. Whether the continued seizure of goods and cash is permissible in the absence of a notice within six months under Section 67(7), or a valid extension under the proviso thereto. Whether a belated confiscation notice under Section 130, issued after expiry of statutory timelines, can cure prior procedural and jurisdictional lapses.

Held that:

The Court noted that the respondents themselves admitted in their affidavit-in-reply that, under Section 83(2), provisional attachment ceases to operate after one year and that no fresh order had been passed. The Court held that once the statutory period expires, attachment stands automatically dissolved and continuation thereof amounts to illegal deprivation of property and business operations.

Further, the Court interpreted Section 67(7) and held that issuance of notice within six months of seizure is mandatory. Even the proviso enabling extension of time was not invoked. Consequently, the authorities had no legal authority to retain the seized gold and cash beyond the prescribed period. The Court held that the notice issued under Section 130 during pendency of the writ petition, nearly two years after seizure, was a clear afterthought and could not retrospectively validate the illegal continuation of seizure and attachment. Statutory lapses cannot be cured by belated action.

The plea of “lack of clarity” and “ongoing investigation” was rejected. The Court observed that the officers were fully conscious of alleged tax evasion but failed to act within statutory timelines, thereby creating illegal leverage in favour of the petitioner.

The Court observing serious dereliction of duty, directed the Chief Commissioner of State Tax to conduct an appropriate inquiry against the officers responsible for the lapses, and 

Case Name: M/s. Reevan Creation Versus State of Gujarat & Ors. dated 09.01.2026

To read the complete judgement 2026 Taxo.online 63