2026-VIL-1086-GAU
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SGST High Court Cases

GST - Provisional attachment of bank accounts under Section 83 CGST Act - Cessation of Provisional attachment after one year - Petitioners, relatives of persons involved in company under investigation for issuing fake invoices, had their bank accounts provisionally attached on 19.05.2022 and 23.05.2022 without service of order in Form GST DRC-22 - Petitioners submitted representations for revocation of freezing but no response received from respondent authorities - Whether provisional attachment orders continue to operate beyond one year from the date of issuance - HELD - Under Section 83(2) of the CGST Act, read with Rule 159 of the CGST Rules, 2017, every provisional attachment ceases to have effect after the expiry of one year from the date of the order made under sub-section (1) - The power to levy provisional attachment is draconian and the statute contemplates attachment during pendency of proceedings under stipulated statutory provisions. A provisional attachment is a pre-emptive measure to protect interest of Government revenue and cannot function as recovery measure - The Supreme Court in Radha Krishan Industries v. State of Himachal Pradesh, and Keshari Nandan Mobile v. Office of Assistant Commissioner of State Tax, held that draconian power conferred by sub-section (1) must be construed so that sub-section (2) is not rendered otiose. Once enquiry culminates into final demand, recourse must be had to appropriate provisions under statute for recovery of tax, interest, penalty - In the present case, provisional attachment orders dated 19.05.2022 and 23.05.2022 ceased to have effect on 19.05.2023 and 23.05.2023 respectively. No Show Cause Notice was issued to petitioners and there is no reason to prevent petitioners from operating their bank accounts - Bank accounts of petitioners shall stand de-freezed and be made operable forthwith – The writ petitions are allowed
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