Provisional Tax Attachment Overturned: Bank Account Unfrozen After One-Year Expiry of Original Seizure Order Under CGST Section 83

HC ruled on provisional attachment of bank account under Section 83 of CGST Act. The court found the original attachment order had expired after one year without extension. HC directed Axis Bank to unfreeze the account, noting no valid continuing order existed. The judgment emphasized statutory limits on provisional attachment and provided relief by allowing bank account operations to resume.

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Issues:
- Provisional attachment of bank account under Section 83 of the CGST Act
- Validity and duration of provisional attachment order
- Extension of provisional attachment
- Adjudication of show cause notice
- Relief sought for de-freezing the bank account

Analysis:
The petitioner filed a petition seeking a writ of Mandamus to direct the respondent to set aside the order dated 06.02.2020 and defreeze the petitioner's Axis Bank Account. The respondent had attached the bank account provisionally under Section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act). Section 83 allows for provisional attachment of assets, including bank accounts, to protect government revenue during certain proceedings. The provisional attachment order ceased to have effect after one year from the date of issuance, as per Section 83(2) of the CGST Act.

The court noted that no further orders extending the provisional attachment were passed beyond the initial order dated 06.02.2020. The judges emphasized that provisional attachment cannot be extended unless a specific order is issued to that effect. Additionally, the court highlighted that a show cause notice issued to the petitioner in July 2021 had not been adjudicated yet. However, since the relief sought by the petitioner was limited to de-freezing the bank account, the court refrained from delving into the ongoing proceedings related to the show cause notice.

Ultimately, the court allowed the petition, declaring that the order dated 06.02.2020 was no longer operational. The court directed Axis Bank to permit the petitioner to operate the bank account unless there was another freezing order in place by any other authority. This judgment provided the necessary relief to the petitioner by lifting the provisional attachment on the bank account and allowing normal operations to resume, in line with the provisions of the CGST Act.

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