Case Law Details
Om Prakash Gupta Pr. Additional Director General & Ors. (Supreme Court of India)
The case concerns a challenge to the provisional attachment of a bank account under Section 83 of the Central Goods and Services Tax Act, 2017. The petitioner initially approached the Delhi High Court under Article 226, contesting both the attachment order dated 28 May 2024 and a Show Cause Notice (SCN) issued under Section 74 of the CGST Act. The petitioner argued that the attachment was invalid as no proceedings had been initiated at the time of attachment and that the Commissioner had not formed the requisite opinion based on tangible material. Additionally, the SCN was challenged on procedural grounds, including lack of timely pre-notice intimation.
The High Court examined Section 83, which permits provisional attachment only after initiation of proceedings under specified chapters of the CGST Act and upon the Commissioner forming an opinion that such attachment is necessary to protect government revenue. It noted that summons had been issued under Section 70 prior to the attachment, thereby satisfying the requirement of initiation of proceedings. The Court relied on the Supreme Court’s decision in Radha Krishan Industries v. State of Himachal Pradesh, which held that provisional attachment is a drastic power requiring strict compliance with statutory conditions, including formation of opinion based on tangible material.
On facts, the High Court found that the investigation revealed suspicious transactions and wrongful availment and passing of Input Tax Credit (ITC) amounting to ₹87,54,083 from allegedly non-existent suppliers. In light of these allegations, the Court declined to interfere with the attachment order, holding that the petitioner had knowledge of the case and could seek further reasons or file objections under Rule 159(5) of the CGST Rules.
The petitioner appealed before the Supreme Court. During the pendency of the Special Leave Petition, a final order under Section 74 of the CGST Act was passed, and the petitioner initiated appellate proceedings under Section 107. The Supreme Court, noting this development, declined to adjudicate the merits of the challenge to the provisional attachment. It clarified that the final order under Section 74 would be examined independently if challenged and should not be influenced by the High Court’s observations.
Importantly, the Supreme Court reiterated the legal position laid down in Radha Krishan Industries that once a final order is passed under Section 74, the provisional attachment ceases to have effect. Accordingly, the Special Leave Petition was disposed of without further adjudication.
Following the Supreme Court’s order, the Delhi High Court considered the remaining issue of the bank account attachment. Observing that the SCN proceedings had culminated in a final order and that appellate remedies had already been invoked, the Court held that the provisional attachment could no longer continue. It relied on the Supreme Court’s clear position that such attachment automatically comes to an end upon passing of a final order under Section 74.
Consequently, the High Court directed that the bank account freezing order be lifted and instructed the department to communicate this to the bank within one week. The petition was disposed of accordingly.
Overall, the case establishes that while provisional attachment under Section 83 is permissible upon initiation of proceedings and formation of opinion based on material, such attachment is temporary in nature and automatically ceases once adjudication under Section 74 is completed. The ruling reinforces the principle that extraordinary powers affecting property must be exercised strictly within statutory limits and cannot continue beyond the lifecycle of the underlying proceedings.
Read Also Order of Delhi HC:- Bank Attachment Lifted by Delhi HC Following GST Proceedings Closure
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
The subject matter of challenge before the High Court was an order of provisional attachment of bank account of the petitioner passed by the Commissioner under Section 83 of the Central Goods and Services Tax Act, 2017 (for short “the CGST Act”). The challenge before the High Court failed. In such circumstances, the petitioner is here before this Court with the present petition.
2. Today, when the matter was taken up for hearing, the learned counsel appearing for the petitioner pointed out that during the interregnum period a final order under Section 74 of the CGST Act has been passed and the petitioner is in the process of challenging the said final order in accordance with law. In such circumstances, we need not now adjudicate this special leave petition on merits. The final order passed under Section 74 of the CGST Act, if ultimately challenged shall be looked into on its own merits in accordance with law without being influenced in any manner by any of the observations made by the High Court in its impugned order.
3. This Court in M/s Radha Krishan Industries versus State of Himachal Pradesh & Ors., (Civil Appeal No 1155 of 2021 arising out of SLP(C) No 1688 of 2021), has categorically said that once the final order is passed under Section 74 of the CGST Act, the provisional attachment comes to an end.
4. The special leave petition stands disposed of.
5. Pending application(s), if any, stand disposed of.
Author Bio
