The Supreme Court has held that the GST Act bars second provisional attachment after one-year limit.
The bench of Justice Dipankar Datta and Justice Augustine George Masih has observed that a provisional attachment order would have no life after a year. Nonetheless, it stands to reason that till such time the amendments are carried out, actions to provisionally attach properties of taxpayers must be implemented in strict compliance with the statute.
The appellant/assessee challenged provisional attachment orders dated 13th November and 18th December 2024 under Section 83 of the CGST Act.
They argued that earlier attachment orders from October 2023 had already lapsed after one year (in October 2024) and could not be “renewed.” Despite this, the tax department issued fresh orders, calling them a renewal, without deciding the appellant’s pending objection.
The Gujarat High Court dismissed the challenge, holding that the law allows a second attachment after the first lapses and that the department acted within its powers to protect the department.
The appellant contended that the is indefensible. The reason assigned by the High Court is fundamentally flawed in as much as it travelled beyond the legislative intent and purpose of securing the interest of the revenue, overlooking that the life of a provisional attachment order is only for a year from the date it is issued.
Drawing a parallel with the provisions of the Central Excise Act, 19446 and the Customs Act, 1962, the appellant further contends that both these taxing statutes provide for provisional attachment. In case of the Excise Act, Section 11DDA provides for provisional attachment. Sub- section (2) of Section 11DDA provides that the attachment shall cease to have effect after 6 months from the date of the order. This section further provides that the attachment may be extended, such that the total period does not exceed two years. Similar to the Excise Act, Section 28BA of the Customs Act also provides for provisional attachment. Section 28BA(2) provides that the attachment may be extended for such period, not exceeding a cumulative period of two years. Juxtaposing these provisions with Section 83 of the CGST Act, it is the contention of Mr. Dave that there is no provision for extending the validity of a provisional attachment order under the latter enactment after its lapse. Absent such provision, and the attachment necessarily having lapsed after one year, he contends that the respondent could not have attached the bank accounts again.
The department contended that the appellant is involved in large scale financial fraud, causing loss of revenue to the Government; that there exists an apprehension that the dues assessed by the department may not be realized; that there is also a reasonable apprehension that the appellant may dispose of its assets, making the recovery of dues owed by the appellant difficult. Having regard to the fraud committed by the appellant and the minimal chance of recovery of the outstanding dues, coupled with absence of any prohibition imposed by the CGST Act, the earlier provisional attachment order was renewed and that it does not suffer from any infirmity, far less any illegality.
The issue raised was whether the CGST Act or any other law in force permits issuance of a second provisional attachment order under sub-section (1) of Section 83 of the CGST Act after the initial provisional attachment order issued thereunder ceases, by reason of efflux of a year from the date of its issuance, in terms of sub-section (2) thereof?
The Apex Court has held that the department could not have issued the provisional attachment orders dated 13th November, 2024 and 18th December, 2024 upon the previous ones having ceased to have any effect by operation of law after a year of its issuance. The bank accounts attached by the respondent shall stand de-freezed and be made operable forthwith upon production of a copy of this judgment before the banks where the appellant maintains its accounts.
Case Details
Case Title: Kesari Nandan Mobile Versus Office Of Assistant Commissioner Of State Tax (2), Enforcement Division – 5
Case No.: Civil Appeal No 9543 Of 2025
Date: 14/08/2025
Mariya is the Senior Editor at Juris Hour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.
