In a recent ruling by the Delhi High Court, the validity of provisional attachment orders under Section 83 of the Central Goods and Services Tax (CGST) Act, 2017, has been clarified. The case of M/s. Krish Overseas v. Commissioner Central Tax-Delhi West & Ors. sheds light on the expiration of such orders after a period of one year from their issuance.

Case Overview

1. The petitioner challenged a communication issued under Section 83 of the CGST Act to seize funds from their bank account by the Branch Manager of HDFC Bank Ltd.
2. They argued that according to Section 83(2) of the GST Act, every provisional attachment order loses effect after one year from its issuance date.
3. The petitioner contended that despite the passage of one year, the bank continued to restrict account operations.

Court Decision

1. The High Court noted that the communication of attachment was dated August 14, 2019, and since a year had elapsed, the order ceased to be effective.
2. Consequently, the bank could no longer restrict the operation of the petitioner’s bank account solely based on this order.
3. The court emphasized that according to Section 83(2) of the GST Act, the lifespan of a provisional attachment order is limited to one year.
4. It was clarified that this ruling does not prejudice any other provisional attachment orders communicated to HDFC Bank by the tax department or any other authority.
5. If such orders are communicated, the bank must adhere to them regardless of the court’s decision.

Section 83 of the CGST Act

1. Section 83 empowers the Commissioner to provisionally attach any property, including bank accounts, belonging to a taxable person to protect government revenue during certain proceedings.
2. The provisional attachment ceases to have effect after one year from the date of the order’s issuance.

This ruling by the Delhi High Court provides clarity on the duration of provisional attachment orders under Section 83 of the CGST Act. It ensures that such orders do not indefinitely restrict the operations of bank accounts and other assets, thereby balancing the interests of taxpayers and government revenue protection.

For taxpayers and legal practitioners, it’s crucial to be aware of these timelines to ensure compliance with the law and safeguard against undue restrictions on financial operations.