2026 (2) TMI 595 - HC - GST

Provisional attachment under Section 83 CGST loses effect after one year; bank must defreeze accounts.

Provisional attachment under Section 83, read with the one year ceiling in Section 83(2), ceases by efflux of time and becomes unenforceable; the court ... Provisional attachment u/s 83(1) of the CGST Act - Provisional attachment under Section 83(2) - cessation after one year - Non-extension or re issuance of provisional attachment after efflux of statutory period - Bank's obligation to defreeze accounts upon cessation of provisional attachment - Effect of efflux of time on enforceability of executive orders - HELD THAT:- The writ petition is partly allowed by observing that not only the provision of the said Act clearly provide that the order under Section 83(1) of the said Act in terms of Section 83(2) ceases to have effect after expiry of the period of one year from the date of the order, the Hon’ble Supreme Court in the case of Kesari Nandan Mobile [2025 (8) TMI 992 - SUPREME COURT], has also while interpreting the above section in no uncertain terms held that by efflux of time of one year in terms of the provisions of Section 83(2) of the said Act the order of provisional attachment ceases to have effect. Accordingly, in my view, the order of attachment dated 3rd January, 2025 which is clearly beyond the period of one year, cannot be continued any further. Since, by efflux of time and having regard to the provisions contained in Section 83(2) of the said Act, the provisional attachment order has ceased, neither can the Commissioner, CGST and Central Excise Patna-II, nor can the petitioner’s Banker continue with the freezing of the petitioner’s property and/or the bank accounts on the basis of the above order of provisional attachment. Writ petitions partly allowed. Issues: Whether a provisional attachment order passed under Section 83(1) of the Central Goods and Services Tax Act, 2017 ceases to have effect after the expiry of one year under Section 83(2) and, if so, whether bank accounts provisionally attached must be de-frozen and made operable.Analysis: Section 83(1) authorises provisional attachment of property including bank accounts; Section 83(2) provides that every such provisional attachment shall cease to have effect after the expiry of one year from the date of the order under sub section (1). The Court relied on the statutory text and the Supreme Court decision in Kesari Nandan Mobile, which held that where the statute does not provide for extension, renewal or re issuance of a provisional attachment after efflux of the one year period, no extension is permissible. The petitioners had shown that more than one year had elapsed since the provisional attachment dated 3rd January, 2025, and that requests to the Commissioner and banks to de freeze accounts had not been acted upon. The Court observed that once the statutory one year period has expired, the provisional attachment ceases to have effect and neither the tax authority nor the bank may continue the freezing of property or bank accounts based on that order.Conclusion: The provisional attachment effected by the order dated 3rd January, 2025 has ceased to have effect by efflux of time under Section 83(2) of the Central Goods and Services Tax Act, 2017; accordingly the bank accounts so attached shall be de frozen and made operable and neither the Commissioner nor the banks can continue the freezing on the basis of that expired provisional attachment. The writ petitions are partly allowed to this extent in favour of the assessee.