Bombay HC: Provisional Attachment of Bank Account is Illegal After 1 Year Under GST

GST provisional attachment order is invalid post 1 year, Bombay High Court ruled.

On 21st April 2022, the communication provisionally attaching the applicant’s bank account would be made illegal and is invalid by virtue of the provisions of Section 83(2) of the CGST Act. On 19th April 2023, the extension of the provisional attachment by the communication was not legal.

The provisional attachment of the bank account of the applicant with the bank under section 83 of the CGST Act, 2017 was been challenged by the applicant/taxpayer, and the communication on 19th April 2023 by which the provisional created on 21st April 2022 would be included under Section 83 of the CGST Act.

The petition was filed after the Respondents resolved the Petitioner’s objections to provisional attachment under Rule 159(5) of the CGST Rules.

The applicant disagreed, Section 83(2) specified that the provisional attachment under Section 83(1) will cease to have effect post-expiry of the duration of 1 year from the order date incurred under subsection (1). On the date 21st April 2022 the provisional attachment order was made and the duration of the 1 year from the date lapsed dated 21st April 2023.

The reply claimed that the letter was simply a message to the bankers, with a copy designated for the applicant. A copy of the new order is issued, which is marked on the order sheet, and a copy is affixed to the Respondents’ reply. As a new order provisionally attaching the Petitioner’s bank account is issued, the provisional attachment of the Petitioner’s account, as indicated in the message dated April 19, 2023, remains valid.

The Respondents did not pass a new order to attach the bank account on April 19, 2023, according to the court.

Read Also: Rajasthan HC: Provisional Case U/S 83 of GST Ceases to Exist After One Year

The court ruled that only making notes in an officer’s file without a formal order being issued, as the law may require, and, most significantly, without notifying the person whose bank account is being attached of the order, cannot constitute an order.

The department failed to demonstrate that the order was granted and served on the petitioner, much less before the provisional attachment order stopped working in accordance with Section 83(2) and the communication of April 19, 2023, the court stated.