Case Law Details
Aarush Enterprises Vs Commissioner (Telangana High Court)
Summary: In Aarush Enterprises v. Commissioner, the Telangana High Court addressed the validity of a provisional attachment of a bank account under Section 83 of the Central Goods and Services Tax Act (CGST Act). The petitioner challenged an order dated May 19, 2023, which provisionally attached their bank account, arguing that the attachment would lose its effect after one year, as stipulated in Section 83(2) of the CGST Act. The Court agreed, stating that the language of Section 83(2) is mandatory and confirmed that the provisional attachment order indeed ceased to be effective after one year from its issuance. The judgment emphasized that while the attachment was invalidated, it did not prevent the authorities from taking lawful action against the petitioner in the future.
The Hon’ble Telangana High Court in the case of Aarush Enterprises v. Commissioner [W.P. No. 14809 of 2024 dated July 02, 2024] set aside the order of provisional attachment of bank account under Section 83(1) of the Central Goods and Services Tax Act (“the CGST Act”), taking into consideration sub-section (2) of Section 83 of the CGST Act, which clearly states that the provisional attachment passed under the aforesaid provision would be valid for a period of one year only.
Facts:
Aarush Enterprises (“the Petitioner”) has filed a writ petition against order dated May 19, 2023 (“the Impugned Order”) wherein the Petitioner’s bank account was provisionally attached by way of exercising powers under Section 83 of the CGST Act
The Petitioner contended that the said Impugned Order would lose its effect on completion of one year from the date of passing of the Impugned Order as per Section 83(2) of the CGST Act, and therefore, would lose its effect.
Issue:
Whether the bank account could be provisionally attached for a period of more than one year?
Held:
The Hon’ble Telangana High Court in the case of W.P. No. 14809 of 2024 held as under:
- Noted that, language of the provision is a clear as the said provision clearly sounds mandatory in nature.
- Opined that, the Impugned Order ceased to have effect after passing of one year from the date of passing of the Impugned Order.
- Held that, the Impugned Order for provisional attachment of Bank account cease to have any effect.
Relevant Provision:
Section 83 of the CGST Act
Section 83: Provisional attachment to protect revenue in certain cases.
(1) Where, after the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue it is necessary so to do, he may, by order in writing, attach provisionally, any property, including bank account, belonging to the taxable person or any person specified in sub-section (1A) of section 122, in such manner as may be prescribed.
(2) Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1).
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Sri Venkata Prasad. P, learned counsel representing Sri M. Naga Deepak, learned counsel appears for the petitioner, Ms. B. Sapna Reddy, learned Senior Standing Counsel for CHIC appears for respondent No.1, Sri P. Sri Harsha, learned Assistant Government Pleader representing learned Special Government Pleader for State Tax appears for respondent No.2 and Sri B. Mukherjee, learned counsel representing Sri Gadi Prayeen Kumar, learned Deputy Solicitor General of India, for respondent No.4.
2. With the consent, finally heard.
3. The challenge mounted in this petition is to the order dated 19.05.2023 (Annexure Pl) passed by respondent No.1, wherein in exercise of power under Section 83 of the Central Goods and Services Tax Act, 2017(for short “the CGST Act”), petitioner’s bank account was provisionally attached.
4. Learned counsel for the petitioner advancing singular submission based on Sub-section (2) of Section 83 of the CGST Act by contending that on completion of one year’s period from 19.05.2023, the said order lost its effect and accordingly, said order may be directed to be set aside on completion of one year from said date.
5. Faced with this, learned Standing counsel for respondent No.1 submits that although, there was internal correspondence between the departments for extending the period of provisional attachment, the fact remains that till date, no decision has been taken by any competent authority for extension of provisional attachment.
6. Sub Section (2) of Section 83 of the CGST Act reads as under:
“Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date et order made under sub-Section (1).”
7. The language employed in the said provision makes it clear that it is couched in a mandatory language And therefore, we find no difficulty in holding that impugned provisional attachment order dated 19.05.2023 cease to have effect on expiry of period of one year from the date of issuance of order i.e. 19.05.2023.
8. We hold accordingly. However, this order will not come in the way of respondents to take action against the petitioner, in accordance with law.
9. The Writ Petition is disposed of. No costs. Interlocutory applications, if any pending, shall also stand closed.
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