Provisional attachment of bank account and seizure of goods: court orders release and inquiry after lapse of attachment period

The article addresses provisional attachment of bank accounts and seizure/confiscation in GST proceedings, focusing on expiry of provisional attachment after one year and failures by officers to reissue fresh orders or requisite notices. Because the attachment lapsed and no fresh order or notice was issued, the court directed release of seized goods and cash and lifting of the provisional bank attachment, and ordered an administrative inquiry into officers conduct for creating procedural lapses that advantaged the taxpayer. The discussion emphasises limitation on provisional attachments, procedural compliance for confiscation notices, and remedies for affected taxpayers.

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Issues: (i) Whether the provisional attachment of the petitioners bank accounts under Section 83(2) of the GST Act, 2017 must be lifted after the statutory period of one year; (ii) Whether goods seized under Section 67(2) of the GST Act, 2017 must be returned under Section 67(7) where no notice of confiscation is issued within six months (or within an extended six months) of seizure.

Issue (i): Whether the provisional attachment under Section 83(2) expires after one year and requires lifting when no fresh order of provisional attachment was passed.

Analysis: Section 83(2) prescribes the temporal limitation for provisional attachment of bank accounts. The official record admits that the provisional attachment expired after one year and no fresh provisional attachment order was passed. The omission to pass a fresh order despite awareness of the limitation and ongoing investigation constituted a failure to comply with the statutory timeline.

Conclusion: Provisional attachment expired after one year and must be lifted; conclusion in favour of the assessee.

Issue (ii): Whether seized goods must be returned under Section 67(7) where no notice of confiscation was issued within six months or by way of a justified extension.

Analysis: Section 67(7) requires issuance of notice within six months of seizure, with a proviso permitting a single extension of up to six months on sufficient cause. The record shows no notice within six months, no valid invocation of the proviso to extend time, and eventual issuance of notice under Section 130 only after the statutory periods had lapsed. The failure to issue timely notice or validly extend the period deprived the authority of the statutory mechanism to retain the seized goods.

Conclusion: Seized goods and cash must be returned to the petitioner; conclusion in favour of the assessee.

Final Conclusion: The petition is allowed to the extent that the provisional attachment of bank accounts must be lifted and the seized goods and cash returned to the petitioner; an administrative inquiry is directed against the officers responsible for the statutory omissions.

Ratio Decidendi: Where statutory periods for provisional attachment and for issuing notice of confiscation under the GST Act are not observed and no valid extension or fresh order is made, the statutory scheme mandates lifting of attachment and return of seized goods to the person from whose possession they were seized.

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