Zubair Enterprises Vs Commissioner CGST And Central Excise (Delhi High Court)
Summary: The Delhi High Court held that provisional attachment of bank accounts under Section 83(2) of the CGST Act, 2017 cannot continue beyond one year from the date of the attachment order. In the present case, the provisional attachment was ordered on 09.03.2021 and the one-year period had already expired. The respondent did not dispute this position.
The Court therefore directed the bank to de-freeze the petitioner’s two bank accounts. It further issued directions to authorities exercising powers under Section 83, requiring provisional attachment orders to expressly state their maximum one-year duration, and directing banks and financial institutions to de-freeze attached accounts after one year unless a fresh, valid attachment order is served. The Reserve Bank of India was also directed to issue an appropriate circular to scheduled banks and financial institutions.
The Court noted that a large number of writ petitions were being filed seeking de-freezing of bank accounts after the expiry of the statutory one-year period.
Cases Discussed
- Sh. Nitin Singhania Vs Commissioner of Central Tax GST (Delhi High Court)
- VKS Industries Vs Commissioner, Central Excise And CGST (Delhi High Court)
- Pashupati Properties Estate Private Limited Vs Commissioner of Central Taxes GST Delhi (Delhi High Court)
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. As per Section 83(2) of the C.G.S.T. Act, 2017, the maximum period for which the provisional attachment can continue to operate is one year. In the present case, the provisional attachment of bank accounts was ordered on 09.03.2021. A period of one year has already lapsed.
2. Learned counsel representing the respondent does not dispute the aforesaid position. Hence, directions are issued to the Bank to de-freeze the Bank Account Nos. 0459 0101 0000 0757 (Current) and 0459 0401 0000 1217 (Saving) of the petitioner, maintained with the Greater Kailash Branch of Jammu & Kashmir Bank. In view of the same, the present Writ Petition stands disposed of.
3. It has been noticed that a significantly large number of Writ Petitions are being filed in the Court for seeking declaration that the provisional attachment has lapsed after a period of one year, and correspondingly seeking the de-freezing of the bank accounts, so attached.
4. Sub-section (2) of Section 83 of the C.G.S.T. Act, 2017 unequivocally provides that an order of provisional attachment of bank account shall cease to have effect upon the expiry of one year from the date of its issuance. Consequently, the maximum period for which a provisional attachment can remain in force is one year. In order to ensure compliance with the statutory mandate and to obviate unnecessary hardship to assessees, the following directions are issued to all authorities exercising powers under Section 83:
A. While passing an order of provisional attachment, the competent authority shall expressly record that the order shall remain operative for a maximum period of one year from the date of its issuance, whereafter it shall automatically cease to have effect unless a fresh order of provisional attachment is passed in accordance with law.
B. All banks and other financial institutions shall, upon the expiry of the aforesaid period of one year, forthwith de-freeze the attached bank accounts, unless a fresh order of provisional attachment, validly issued under law, is served upon them.
C. The Reserve Bank of India is directed to issue an appropriate circular to all scheduled banks and financial institutions apprising them of the mandate contained in Section 83(2) of the Act and the present directions, so as to ensure uniform compliance and prevent unnecessary harassment to assessees.
5. Let a copy of this Order be sent to the Secretary, Department of Revenuein the Ministry of Finance, Government of India and the Governor of Reserve Bank of India, for necessarycompliance.
6. The Respective Commissioners are also requested to circulate this Order to all concerned.
