Case Note & Summary
The Bombay High Court dealt with three writ petitions challenging the provisional attachment of bank accounts under Section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act). The petitioners, Bharat Parihar, Kishan Lal Bunkar, and Sunbright Designers Pvt. Ltd., had their bank accounts with Yes Bank provisionally attached on 21st April 2022, and a subsequent communication dated 19th April 2023 retained the attachment. The petitioners filed objections under Rule 159(5) of the CGST Rules, which were disposed of by the respondents. Aggrieved, they approached the High Court under Article 226 of the Constitution. The respondents raised a preliminary objection that the order disposing of objections was appealable under Section 107 of the CGST Act, and thus the writ petition should not be entertained. The court, relying on the Supreme Court's decision in Radha Krishan Industries vs. State of Himachal Pradesh (2021) 6 SCC 771, held that such an order is not appealable and the writ petition is maintainable. On merits, the court examined Section 83 of the CGST Act, which empowers the Commissioner to provisionally attach property, including bank accounts, during the pendency of proceedings under specified sections (62, 63, 64, 67, 73, or 74) if he is of the opinion that it is necessary to protect government revenue. The court noted that the provisional attachment ceases to have effect after one year. The court found that the respondents had not demonstrated the pendency of any proceedings under the specified sections at the time of attachment, nor had they recorded reasons for forming the opinion that attachment was necessary. The attachment was therefore held to be invalid. The court quashed the provisional attachment orders and directed the respondents to defreeze the bank accounts. The judgment emphasizes that provisional attachment is a drastic measure and must strictly comply with the conditions precedent under Section 83.
Headnote
A) Constitutional Law - Writ Jurisdiction - Maintainability - Alternative Remedy - Order disposing objections under Rule 159(5) of CGST Rules is not an appealable order; writ petition under Article 226 is maintainable as held by Supreme Court in Radha Krishan Industries vs. State of Himachal Pradesh (2021) 6 SCC 771 (Paras 3, 63-66). B) Goods and Services Tax - Provisional Attachment - Section 83 CGST Act, 2017 - Conditions Precedent - Provisional attachment under Section 83 requires pendency of proceedings under sections 62, 63, 64, 67, 73 or 74, formation of opinion by Commissioner for protecting revenue, and recording of reasons; attachment must be based on tangible material and cannot be mechanical (Paras 4-6). C) Goods and Services Tax - Provisional Attachment - Duration - Section 83(2) CGST Act, 2017 - Provisional attachment ceases to have effect after one year from the date of order; continued attachment beyond one year is invalid (Para 4).
Issue of Consideration
Whether the provisional attachment of bank accounts under Section 83 of the CGST Act, 2017 was valid and whether the writ petition is maintainable despite availability of alternative remedy.
Final Decision
The court allowed the writ petitions, quashed the provisional attachment orders, and directed the respondents to defreeze the bank accounts.
Law Points
- Provisional attachment under Section 83 CGST Act requires pendency of proceedings under specified sections
- formation of opinion by Commissioner for protecting revenue
- and recording of reasons
- order disposing objections under Rule 159(5) is not appealable
- writ jurisdiction under Article 226 is maintainable
- attachment must be based on tangible material and not be mechanical
- period of attachment cannot exceed one year.
