Validity of 2nd provisional attachment order after expiry of 1st provisional attachment order u/s 83 of the Central/State GST Act.
Whether second attachment order valid after expiry of first provisional attachment order u/s 83 of the GST Act 2017? – Supreme Court to decide
ABCAUS Case Law Citation:
4654 (2025) (07) abcaus.in SC
Important Case Laws relied upon by Parties:
M/s. Shree Dhanlaxmi Metal Industries vs. the State of Gujarat
RHC Global Exports Private Limited
Whether a provisional attachment order which lapsed on expiry of one year under Section 83 of the Goods and Services Tax Act, 2017 can be followed by another provisional attachment order, without any final attachment order been made during the one-year period of the initial provisional attachment order – Supreme Court admitted the Petition.
As per Sub-section (2) of Section 83 of the Central Goods and Services Tax Act, 2017/Gujarat Goods and Services Tax Act, 2017/, the life of the provisional attachment is for one year only.
In the instant case, the petitioner was registered under provisions of the Central / State Goods and Services Tax Act, 2017 (the GST Act). The GST authority initiated search action at the premises of the petitioner under section 67 of the GST Act on the information received to the effect that the petitioner was involved in circular trading / bogus billing of the goods.
The GST authority after recording the grounds for subjective satisfaction on the basis of the investigation and the modus operandi of the petitioner, passed attachment order provisionally attaching bank accounts along with other immovable properties of the petitioner.
The petitioner filed objections as provided under Rule 159 of the Central / State Goods and Service Tax Rules, 2017 (the GST Rules) against the attachment of the bank accounts for release of the bank accounts and property which were provisionally attached under section 83 of the GST Act.
Thereafter, on completion of one year from the date of provisional attachment, the petitioner made an application to pass an appropriate order intimating the bank that the provisional attachment order has ceased to operate as per section 83(2) of the GST Act as the period of one year was completed and therefore, the provisional attachment order has to be lifted on the said date in absence of any further renewal.
The petitioner also approached the High Court challenging the orders of provisional attachment. However, the Petition was disposed of with observation that the life of the provisional attachment is for one year only and therefore, the petition had become infructuous.
In the instant Petition, it was the case of the petitioner that the GST once again attached the bank account by renewal of the attachment by a second provisional attachment order.
It was submitted that as per the settled legal position on completion of one year from the date of the provisional attachment order as per sub-section (2) of section 83 of the GST Act, the effect of such provisional attachment order shall cease and thereafter the provisional attachment would not be in operation.
It was pointed out that the GST Authority had passed the renewal of provisional attachment for the bank account whereas after the expiry of the original provisional attachment order there cannot be any further provisional attachment order and such order thereafter did not exist in view of the provisions of section 83(2) of the GST Act.
On the other hand, the GST Department referring to the above modus operandi of the Petitioner submitted that the investigation was still going on at multiple places across the State and more than 200 places are under scrutiny for search and seizure activity. It was pointed out that the respondent had issued the intimation of tax ascertained as being payable under section 74(5) of the GST Act in Form GST DRC 01A whereby the estimated amount of tax, interest and penalty works out to be in crores. It was submitted that the petitioner was having no means to meet with such estimated tax liability which was found out after investigation.
Regarding the renewal of provisional attachment order, it was submitted that the GST Authority had recorded the fresh satisfaction for renewal of the provisional attachment It was submitted that though the orders of provisional attachment stated that the same were renewal of provisional attachment, but in fact they were fresh provisional attachment orders passed in view of the intimation issued in Form GST DRC 01A.
The Hon’ble High Court observed that the satisfaction note for first provisional attachment order prima facie revealed that the petitioner was involved in the scam which was complex and huge and investigation was going on at multiple places across the whole State and more than 200 places were being under scrutiny for search and seizure activity and many digital devices were being checked and forensic procedure were placed into motion and quantum of suspicious bogus GST refund claim of which the place of the petitioner was one of the 200 places where search was conducted, was estimated to the tune of Rs.360 crore.
The Hon’ble High Court further noted that as per the second satisfaction note which was recorded after one year from the date of initiation of investigation, it was found that the petitioner was liable to pay tax, penalty and interest for a large amount. Also, statement of the petitioner clearly showed the admission on the part of the petitioner that he had indulged into the fraudulent activity of issuance of the bogus bills as well as availing the input tax credit which shows the prima facie case against the petitioner which required the exercise of powers conferred under section 83 of the Act for provisional attachment which was made by the respondent on the date of search.
The Hon’ble High Court noted that undoubtedly as per the settled legal position, the life of the provisional attachment order under section 83(1) would be of one year meaning thereby the first provisional attachment orders passed cease to have effect from the expiry of one year. However, there is no embargo upon the respondent to renew such provisional attachment order thereafter on recording the satisfaction for the provisional attachment of the bank accounts.
The Hon’ble High Court opined that it cannot be said that the GST Authorities had committed breach of provision of section 83 of the GST Act which is intended to safeguard the interest of the revenue which cannot be said to any harassment to the petitioner as tried to be demonstrated. In the facts of the case, therefore, the issuance of the impugned orders for provisional attachment over the bank accounts were not required to be interfered with as the petitioner appeared to have indulged in the transaction of the fraudulent invoices resulting into loss of revenue by utilizing the fake ITC in crores.
As a result, the Petition was dismissed by the Hon’ble High Court.
The assessee challenged the judgment of the Hon’ble High Court before the Hon’ble Supreme Court by way of filing a Special Leave Petition (SLP).
The Apex Court admitted the appeal on the question of law that whether a lapsed provisional attachment order under Section 83 of the Goods and Services Tax Act, 2017 can be followed by another provisional attachment order, without any final attachment order having been made during the one-year period following issuance of the initial provisional attachment order?
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