The Hon’ble High Court of Telangana vide its order dated 22.12.2022 in the matter of Greenfinch Team Management P. Ltd. Vs. Union of India, Directorate General of Intelligence in W.P. No. 44235 of 2022, set aside and quashed the attachment orders issued for attaching the bank accounts of the assessee.  It was found by the Hon’ble Court that the Provisional attachment under Section 83 can only be temporary and not for an indefinite period, and would have a life span of one year from the date of order.

The Petitioner filed the writ petition before the Hon’ble High Court challenging the provisional attachment orders issued on 02.12.2019 and again on 08.12.2021 to attach the bank accounts of the petitioner.

It was submitted on the behalf of the petitioner that the Additional Director General, Directorate General of GST Intelligence, Hyderabad Zonal Unit had provisionally attached its bank account with ICICI Bank vide order dated 02.12.2019 and thereafter, fresh order was passed by the Principal Additional Director General for provisionally attaching the bank account with Corporation Bank.  Further, referring to Section 83(2), it was submitted that the provisional attachment order cannot be continued beyond a period of one year.  To support his contention, reliance was placed on the judgments of various high courts dealing with the mandate prescribed under Section 83(2) of the CGST Act.

On the other hand, it was submitted on the behalf of the respondents that that investigations are ongoing against the petitioner under Section 67 of the Central Goods and Services Tax Act, 2017, and for the said reason, the bank account of the petitioner was provisionally attached. If the attachment is lifted, there is a possibility of petitioner withdrawing the amount deposited in the said bank account which may cause prejudice to the interest of the respondents.

Held: –

• The Hon’ble Court after considering the submissions made, facts of the case and from the perusal of the relevant provisions, found that on 12.2019, in exercise of powers conferred under Section 83, the Additional Director General, Directorate of GST Intelligence, Hyderabad Zonal Unit had written to the Regional Officer, ICICI Bank Limited, Hyderabad, and directed not to allow any transaction or debit from the bank account of the petitioner. Thereafter, almost after two years, similar provisional attachment was ordered by the Principal Additional Director General in respect of account of the petitioner maintained with the Corporation Bank in Hyderabad.
• The Hon’ble Court considering the above factual position and from the perusal of Section 83, found that it is very clear from the reading of Section 83 that where during the pendency of any proceedings under Sections 62, 63, 64, 67, 73 or 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary to do so, 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. Though, sub-section (2) provides that 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).
• It was found by the Hon’ble Court that Attachment of bank account of a taxable person is a serious measure which has the effect of not only adversely affecting property rights of such person but is also an intrusion into his privacy. The power being drastic, it has to be exercised by a high authority like the Commissioner, if proceedings under Sections 62, 63, 64, 67, 73 or 74 are pending against the taxable person. Further, the Commissioner must also form an opinion that to protect the interest of government revenue, if the aforesaid two conditions are fulfilled, Commissioner may pass an order provisionally attaching any property of the taxable person including bank account by making an order in writing. However, being a coercive provision legislature has ensured that duration of provisional attachment does not exceed a period of one year.
• Further, the provisional attachment order cannot be for an indefinite period. The two words ‘provisional’ and ‘attachment’ read in conjunction can only mean a ‘temporary attachment’.  Therefore, to ensure that the valuable right of a taxable person is not infringed for an indefinite period, legislature itself has provided for a definite time line in sub-section (2) of Section 83 of the CGST Act mandating that a provisional attachment order would have a life span of only one year from the date of the order made under sub-section (1). After expiry of a period of one year, such provisional attachment would cease to have effect.
• Thereafter, the Hon’ble Court referring to the afore-mentioned legislative mandate, held that the both the provisional attachment orders dated 02.12.2019 & 08.12.2019, cannot be allowed to continue beyond the period prescribed under the statute. Hence, both the provisional attachment orders are set aside and quashed.

The Hon’ble Court with the above findings, allowed the writ petition by setting aside and quashing the impugned provisional attachment orders dated 02.12.2019 & 08.12.2019.  Since, the provisional attachment orders are quashed, respondents shall communicate the same to all the bankers of the petitioner.

For more Judgments like this, Subscribe TAXO today