HC frowns at Provisional attachment orders under GST not lifted on expiry of one year

High Court frowns at Provisional attachment orders passed u/s 83(1) GST lifted only their illegality being questioned

In a recent judgment, the Hon’ble Allahabad High Court has expressed displeasure over not lifting of Provisional attachment orders passed under section 83(1) of CGST Act and lifted only their illegality being questioned by High Court

ABCAUS Case Law Citation:
ABCAUS 3996 (2024) (05) HC

In the instant case, the assessee had filed a Writ Petition before the Hon’ble High Court praying a direction to the Additional Director, Directorate General of Goods and Services Tax Intelligence to release/restore the provisionally attached bank account of the Petitioner Firm in view of provision of Section 83(2) CGST Act barring attachment of bank account beyond one year.

The Hon’ble High Court observed that the provisional attachment of the bank account of the petitioner firm had expired in view of the provisions of Section 83(2) of the CGST Act, 2017. Yet, the provisional attachment was continued by the respondent GST Intelligence Unit.

On the next hearing, a written instruction written to the bank by the Additional Director General was produced before the bench. As per the said instruction the bank, the Additional Director General had admitted that as per the provisions, provisional attachment ceases to have effect after the expiry of a period of one year from the date of the order made. The bank was informed that since one year has passed, the provisional attachment of the said account had ceased and necessary action in this regard may be taken at the end of the bank.

On the strength of such instructions, The Revenue stated that provisional attachment order would stand lifted allowing the petitioner to utilise the bank account, as before.

However, the Bench observed that such occurrences are becoming common. Frequently, petitions are being filed for similar relief. It appears to be a common mistake being caused by revenue authorities where provisional attachment orders may never continue for more than one year are allowed to exist beyond that end date. Such error on the part of the revenue authorities leaves the assessee with no option but to approach this Court for effective direction on the revenue authorities to actually lift the provisional attachment.

The Hon’ble High Court expressed displeasure that in face of the statutory provision being unequivocally clear, the revenue authorities when called upon by this Court, take a stand as has been noted in the present facts. Thus, the provisional attachment orders are actually lifted only upon the revenue authorities being questioned about the illegality of their action, by this Court.

The Hon’ble High Court stated that such a course is wholly undesirable. Once the statutory law admits of no doubt and the revenue authorities do offer correction to the error committed by them upon being pointed out by this Court, we find such litigation whenever it arises to be wholly avoidable.

The Hon’ble High Court directed the copy of its order to be communicated to the Central Board of Indirect Taxes and Customs and Commissioner, Commercial Tax, U.P. for taking corrective and necessary action.

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