Provisional Attachment Orders Under GST Section 83 Automatically Lapse After One Year, Court Orders Release of Properties

The HC ruled in favor of the petitioner, directing the release of attached immovable properties and bank accounts. The court found that provisional attachment orders under Section 83 of CGST Act had automatically lapsed after one year (on November 27, 2021), and no fresh orders had been issued. Despite the petitioner being a shareholder in the company under inquiry, the court determined they were not a taxable person under Section 2(107). The respondent was ordered to defreeze the bank account and release properties within three days of the order's upload.

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Issues:
Challenge to attachment of immovable properties and bank accounts under Section 83 of the CGST Act, 2017; Petitioner's status as a shareholder of a company under inquiry; Petitioner's contention of not being a taxable person; Validity of provisional attachment orders; Effect of lapse of one year on attachment orders; Show-cause notice issued under Section 74 of the CGST Act.

Analysis:
The judgment by the Delhi High Court, delivered by Hon'ble Mr. Justice Manmohan, addressed the challenge raised in a writ petition against the attachment of immovable properties and bank accounts of the Petitioner under Section 83 of the CGST Act, 2017. The Petitioner, a shareholder of M/s Milkfood Ltd., contended that despite owning shares in the company, he was not a Director, authorized signatory, or involved in day-to-day decision-making. The Petitioner argued that he did not qualify as a taxable person under Section 2(107) of the CGST Act, 2017 and was not registered under the Act. The Court noted that a previous order had quashed the provisional attachment of the Petitioner's daughter's bank accounts. The Petitioner further highlighted that the provisional attachment order had lapsed after one year, on 27th November, 2021.

The Court observed that no fresh attachment orders had been issued after the expiry of the one-year period following the initial order under Section 83(1) of the CGST Act. The Respondent had issued a show-cause notice under Section 74 of the Act. The Court directed the Respondent to defreeze the Petitioner's bank account and release the immovable properties within three days of the order's upload. The judgment emphasized that the provisional attachment orders automatically cease to have effect after one year, and in the absence of fresh orders, the Respondent was instructed to release the attached assets. The Court disposed of the writ petition and related applications with these directions, ensuring relief to the Petitioner regarding the attachment issues and compliance with statutory provisions.

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