The Delhi High Court in the case of M/s. KRISH OVERSEAS VERSUS COMMISSIONER CENTRAL TAX-DELHI WEST & ORS. vide W. P. (C) 5407/2024 & CM APPL. 22339/2024 dated 16.04.2024, has held that in terms of Section 83(2) of the CGST Act, 2017,  every provisional attachment ceases to have effect after the expiry of a period of one year from the date the order is made under Section 83(1) of the GST Act.

Facts of the Case:- In this case, the petitioner has challenged the communication issued under Section 83 of the Central Goods and Service Tax Act, 2017 to the Branch Manager, HDFC Bank Ltd., Paschim Vihar Branch, to seize the outward movement of funds from the bank account of the petitioner. The petitioner submitted that the validity of an order under Section 83 is one year, and despite the passage of one year, the bank is not permitting the operation of the account.

The Petitioner submitted that Section 83 of the GST Act empowers the Commissioner to provisionally attach any property, including a bank account, belonging to a taxable person for the purposes of protecting the interest of government revenue if, in the opinion of the Commissioner, it is necessary to do so. Section 83(2) stipulates that every provisional attachment ceases to have effect after the expiry of a period of one year from the date the order is made under Section 83(1) of the GST Act.

Held:- The High Court observed that the communication of attachment is dated August 14, 2019, and a period of one year has elapsed since the issuance of the communication. Consequently, the order dated August 14, 2019 has ceased to be effective and cannot be further implemented either by the department or the bank. The order dated August 14, 2019 ceases to have effect. Consequently, the bank henceforth cannot restrain the operation of the bank account of the petitioner based solely on the basis of an order.

The court held that, in view of Section 83(2) of the GST Act, the life of an order of provisional attachment is only one year.

Further, it was clarified that  the order would be without prejudice to any other order of provisional attachment issued by either the respondents department or any other authority communicated to the HDFC Bank. In case any such order is communicated to the HDFC Bank, the bank shall give due credence to it irrespective of the court's order.

Relevant extract of Section 83 of the CGST Act, reads as under

“83. Provisional attachment to protect revenue in certain cases.

(1) Where during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property, including bank account, belonging to the taxable person in such manner as may be prescribed.

(2) Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1).”

To read the complete judgment 2024 Taxo.online 776