Provisional attachment order of bank account under Section 83 effective only for one year

The Telangana High Court has ruled that a provisional attachment order for a bank account under Section 83 of the CGST Act is only valid for one year. The court found that sub-section (2) of Section 83 clearly states such attachments automatically cease to have effect after this period. Consequently, an order issued on May 19, 2023, was set aside as it had exceeded its one-year validity.

The Hon'ble Telangana High Court in the case of Aarush Enterprises v. Commissioner [W.P. No. 14809 of 2024 dated July 02, 2024] set aside the order of provisional attachment of bank account under Section 83(1) of the Central Goods and Services Tax Act ("the CGST Act"), taking into consideration sub-section (2) of Section 83 of the CGST Act, which clearly states that the provisional attachment passed under the aforesaid provision would be valid for a period of one year only.

Facts:

Aarush Enterprises ("the Petitioner") has filed a writ petition against order dated May 19, 2023 ("the Impugned Order") wherein the Petitioner's bank account was provisionally attached by way of exercising powers under Section 83 of the CGST Act

The Petitioner contended that the said Impugned Order would lose its effect on completion of one year from the date of passing of the Impugned Order as per Section 83(2) of the CGST Act, and therefore, would lose its effect.

Issue:

Whether the bank account could be provisionally attached for a period of more than one year?

Held:

The Hon'ble Telangana High Court in the case of W.P. No. 14809 of 2024 held as under:

• Noted that, language of the provision is a clear as the said provision clearly sounds mandatory in nature.
• Opined that, the Impugned Order ceased to have effect after passing of one year from the date of passing of the Impugned Order.
• Held that, the Impugned Order for provisional attachment of Bank account cease to have any effect.

Relevant Provision:

Section 83 of the CGST Act

Section 83: Provisional attachment to protect revenue in certain cases.

(1) Where, after the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV, 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 or any person specified in sub-section (1A) of section 122, 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).

OFFICIAL JUDGMENT COPY HAS BEEN ATTACHED