GST Provisional Attachment Order Not Valid After Expiry Of 1 Year: Bombay High Court

The Bombay High Court has held that the GST provisional attachment order is not valid after one year.

The bench of Justice G.S. Kulkarni and Justice Jitendra Jain has observed that the communication dated April 21, 2022, provisionally attaching the Petitioner’s bank account is rendered illegal and invalid by virtue of the provisions of Section 83(2) of the CGST Act. The extension of the provisional attachment by communication dated April 19, 2023, was illegal.

The petitioner/assessee challenged the provisional attachment of the bank account of the Petitioner with the bank under Section 83 of the CGST Act, 2017 and a communication dated April 19, 2023, by which the provisional attachment made on April 21, 2022, is retained under Section 83 of the CGST Act.

The petition was filed after the objections of the Petitioner to provisional attachment were disposed of under Rule 159(5) of the CGST Rules by the Respondents.

The petitioner contended that Section 83(2) states that the provisional attachment under Section 83(1) shall cease to have effect after the expiry of a period of "one year" from the date of the order made under subsection (1). The provisional attachment order was made on April 21, 2022, and a period of one year from the date expired on April 21, 2023.

The respondent contended that the letter is only a communication to the bankers, with a copy marked for the Petitioner. A copy of the fresh order is passed, which is noted on the order sheet, a copy of which is annexed to the reply of the Respondents. As a fresh order is passed provisionally attaching the Petitioner’s bank account, the provisional attachment of the Petitioner’s account, as informed in the communication dated April 19, 2023, is valid.

The court did not find any fresh order having been passed by the Respondents to attach the bank account on April 19, 2023.

The court held that mere notings in the file of the concerned Officer cannot constitute an order without a formal order, as the law may mandate being passed and, most importantly, an order being communicated to the affected person, whose bank account is attached.

The court noted that the department has failed to show that the order was passed and served on the petitioner, much less prior to the provisional attachment order ceasing to operate by virtue of the provisions of Section 83(2) and the communication dated April 19, 2023.

Case Title: Bharat Parihar Vs. State of Maharashtra

Case No.: Writ Petition No.3742 Of 2023

Date: 30/06/2023

Counsel For Petitioner: Brijesh Pathak

Counsel For Respondent: Shruti D. Vyas

Click Here To Read The Order