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 relied on higher authority confirming that expiry of the statutory one year period terminates the provisional attachment, so the attachment dated beyond one year cannot continue. Consequent to cessation, neither the tax authority nor the taxpayer's bank may lawfully continue freezing the taxpayer's property or bank accounts and the bank is obliged to defreeze funds. Writ petitions were partly allowed to that limited extent.

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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.

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