Provisional Bank Account Attachment Under GST Section 83(2) Must End After One Year, Court Orders Immediate Defreezing

The HC directed respondents to defreeze petitioners' bank accounts that were provisionally attached in September 2020. The court noted that under Section 83(2) of the CGST Act, provisional attachment orders cease to have effect after one year from issuance. Despite notices under Section 74 of Delhi GST Act being issued by State GST, no fresh DRC-22 notices or attachment orders had been issued after the original orders. The court determined the provisional attachment was no longer effective and ordered the accounts to be defrozen within three days of judgment.

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Issues:
Seeking directions to release/de-freeze provisionally attached bank accounts.

Analysis:
The judgment was delivered by Hon'ble Mr. Justice Manmohan. The petitioner filed writ petitions to direct the Respondents to release/de-freeze their bank accounts provisionally attached by orders dated 10th and 11th September 2020. During the hearing, the Respondents' counsel sought time to obtain instructions. In the latest hearing, it was stated that no fresh DRC-22 notices were issued against the Petitioners, but notices under Section 74 of the Delhi GST Act were issued by the State GST to the Petitioners. The Court noted that no fresh attachment order had been issued to the Petitioners after the impugned orders. As per Section 83(2) of the CGST Act, provisional attachment orders cease to have effect after one year from the date of issuance. Consequently, the impugned provisional attachment order was no longer effective. The Court directed the Respondents to defreeze the bank accounts of the Petitioners within three days from the judgment date, and with this direction, the writ petitions and pending applications were disposed of.

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