Provisional Tax Attachment Orders Invalidated After One-Year Limit, Banks Must Release Frozen Accounts Immediately

HC ruled that provisional attachment orders under CGST Act expired after one year, rendering the bank account attachments invalid. The court directed banks to cease restrictions on account operations, effectively allowing the petitioner unrestricted access to the previously attached bank accounts due to statutory time limitations.

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Issues involved:
The issues involved in the judgment are the validity of the impugned order provisionally attaching bank accounts under the Central Goods and Services Tax Act, 2017.

Impugned Order Challenge:
The petitioner challenged an order dated 20.04.2022, which provisionally attached bank accounts, arguing that it was passed without sufficient reason and in excessively wide terms. The order not only targeted the petitioner's accounts but also those of immediate family members and related entities, which was deemed beyond the powers of Section 83 of the CGST Act.

Operative Period of Attachment Orders:
The respondents contended that the provisional attachment order had expired after one year from its issuance, as per Sub-section (2) of Section 83 of the CGST Act. Consequently, the court decided not to issue further orders, allowing the petitioner to operate the bank accounts without hindrance due to the impugned order.

Additional Bank Accounts Attachment:
The petitioner listed fifteen bank accounts, including those with IndusInd Bank, which were separately attached on 20.04.2022. The respondents acknowledged that these accounts had also ceased to be under attachment due to the passage of time as per Section 83(2) of the CGST Act.

Court's Decision:
Given the expiration of the attachment orders and the lack of ongoing necessity, the court directed the concerned banks not to obstruct the operation of the bank accounts. Consequently, the petition was disposed of on these terms.

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