Arpit Trading Company Vs PR. Commissioner of Goods And Service Tax (Delhi High Court)
The Delhi High Court has directed the unfreezing of a company’s bank account, ruling that a provisional attachment order under the Central Goods and Services Tax (CGST) Act, 2017, had expired. In the case of Arpit Trading Company vs. PR. Commissioner of Goods and Service Tax, the court held that any provisional attachment under Section 83 of the CGST Act ceases to be operative after one year. This decision provides significant relief to the petitioner, whose bank account was frozen without the company receiving a formal attachment order.
The dispute arose from a communication sent by the GST authorities to the IDFC Bank on March 7, 2022, directing the bank to not permit any debits from the petitioner’s account. The petitioner, Arpit Trading Company, claimed that it had never received an official provisional attachment order as required under Section 83 of the CGST Act. The company was left in a state of operational limbo, unable to access its funds without a clear legal basis for the freeze. The company approached the High Court to challenge the bank’s action and seek the unfreezing of its account.
The core of the legal issue revolved around Section 83(2) of the CGST Act. This provision clearly states that any order of provisional attachment issued under the Act becomes inoperative after a period of one year from the date of the order. The court observed that even if it were to assume that the communication to the bank was based on a valid provisional attachment order, that order’s legal effect would have expired on March 7, 2023, one year after the initial communication.
