Provisional Attachment Under Section 83 Cannot Last Indefinitely Amid Unreasonable Delay in Show-Cause Notice

The HC held that the provisional attachment of the petitioner's bank accounts under Section 83 cannot be maintained indefinitely, especially when there is an unreasonable delay in issuing show-cause notices. The court noted a nearly four-year delay between the inspection and the issuance of the notice, which defeats the provisional nature of the attachment meant to protect revenue temporarily. The respondents must adhere to statutory timelines and proceed expeditiously. Consequently, the HC allowed the petition, directing the removal of the provisional attachment and the return of seized electronic devices.

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Issues Involved:
The issues involved in the judgment are the legality of the provisional attachment of bank accounts and seizure of electronic devices under the Central Goods and Services Tax Act, 2017.

Provisional Attachment of Bank Accounts:
The petitioner sought a mandamus to direct the removal of the provisional attachment of bank accounts and return of seized electronic devices following an inspection for alleged bill trading in violation of the CGST Act. The provisional attachment under Section 83 of the Act ceased to have effect after one year from the date of attachment, which occurred in January 2019. The attachment was re-imposed twice thereafter, valid until January 2023. The court found that the continued attachment of bank accounts for several years was not justified, especially considering the delay in issuing a show-cause notice in October 2022, almost four years after the inspection. The court held that the purpose of Section 83, which is to protect revenue in certain cases, cannot be used to the detriment of the assessee for an extended period.

Legal Considerations and Precedents:
The court considered the provisions of Section 83 of the CGST Act, which allows for provisional attachment to protect government revenue during certain proceedings. The court also referenced a decision of the Calcutta High Court and a previous decision of the Madras High Court in similar cases. The court highlighted that the purpose of Section 83 is to ensure timely proceedings and not to unduly burden the assessee with prolonged attachments.

Conclusion and Order:
The court ruled in favor of the petitioner, directing the respondents to remove the attachment on the bank accounts and allow operation of the accounts. The court emphasized the importance of timely proceedings and the need for the department to proceed in a time-bound manner. The writ petition was allowed, and the respondents were instructed to take necessary actions within one week from the date of the judgment. No costs were awarded in the matter.

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