The Madras High Court has dismissed two appeals filed by the Commissioner of CGST and Central Excise against an order concerning the provisional attachment of bank accounts and said there was no scope to continue the attachments more than four and a half years after they were imposed.
The Bench of Justice M. Dhandapani and Justice N. Dilip Kumar observed that an attachment under Section 83 of the Central Goods and Services Tax Act, 2017, ceases to have effect after one year. The appeals had been admitted in May 2022, but the revenue department had obtained no interim order staying the relief granted to the companies.
Buy Now: E-Magazine: 1000+ Landmark GST Judgments (2017–2026)
The Bench held that provisional attachments imposed on two companies’ bank accounts in February 2022 could not remain in force in 2026. It relied on the statutory one-year limit under Section 83 of the CGST Act.
The Commissioner provisionally attached the bank accounts of PSTS Logistics on February 18, 2022, and PSTS Heavy Life and Shift on February 22, 2022, invoking Section 83 of the CGST Act read with Rule 159(1) of the CGST Rules. Both companies objected to the attachments. The Commissioner rejected their objections on March 10, 2022.
The companies challenged those decisions before a single judge of the High Court. In an order dated April 27, 2022, the single judge took note of their undertaking to pay a consolidated ₹25 lakh per month towards their tax liabilities. The judge directed them to submit fresh representations setting out their offer and proposing additional security to protect the revenue’s interests.
The Commissioner was asked to consider the representations and pass a reasoned order, preferably by May 13, 2022. The arrangement was intended to help arrive at a workable payment formula while enabling the companies to pay their employees’ salaries. The revenue department appealed against that order.
When the appeals came before the Division Bench, the court focused on the age of the attachments. It referred to the Supreme Court’s ruling in Kesari Nandan Mobile v. Office of Assistant, which held that a provisional attachment under Section 83 ceases to have effect after one year. The High Court also noted the Supreme Court’s view that the stringent attachment power cannot be extended or renewed without statutory authority.
The Division Bench found that no interim order had been granted in the revenue’s appeals. In those circumstances, it said, the single judge’s order should have been put into operation; in any event, the attachments had lapsed by operation of law. An attachment made in 2022 could not continue in 2026.
The court therefore held that nothing remained to be adjudicated in the two appeals and dismissed them without costs. It also closed the connected miscellaneous petitions.
Membership Required to Access Case Details & Order Copy
To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.
