The Madras High Court has held that the provisional attachment of a bank account under Section 110(5) of the Customs Act, 1962 cannot continue beyond the maximum statutory period of twelve months, even if a show cause notice has subsequently been issued and adjudication proceedings remain pending.
The bench of Justice Hemant Chandangoudar directed HDFC Bank to immediately defreeze the bullion account holding that the attachment initiated in August 2022 had ceased to operate through the expiry of the statutory period. The court clarified that the subsequent issuance of a show cause notice under Section 124 could not, by itself, extend the life of the provisional attachment.
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The case arose from a communication issued by the Deputy Director of the Directorate of Revenue Intelligence, Chennai Zonal Unit, directing HDFC Bank to freeze the firm’s bank account.
Dhruv Jewellers, represented by its proprietor Dinesh Sharma, is engaged in exporting gold jewellery. According to the firm, DRI officers had searched its premises but found no incriminating material. Nevertheless, the authorities issued the communication directing the freezing of its bullion account maintained at HDFC Bank’s Dr. Radhakrishnan Salai branch in Chennai.
The firm approached the High Court seeking to have the communication quashed and to regain access to the account. Although it raised several grounds against the freezing, the court found that the dispute could be decided on the statutory time limit governing provisional attachment.
Examining Section 110(5), the court explained that the provision permits provisional attachment of a bank account for a period not exceeding six months.
The Principal Commissioner of Customs or Commissioner of Customs may extend that period by a further period not exceeding six months. However, the extension requires reasons to be recorded in writing and must be communicated to the person whose account has been attached before the originally specified period expires.
The court consequently held that a provisional attachment under this provision cannot remain in force beyond twelve months.
Applying that limit to the case, the judge observed that the account had been frozen pursuant to the August 4, 2022 communication. Even assuming that the authorities had validly extended the attachment in accordance with the statutory requirements, the maximum permissible period had long since expired. Its continuation could therefore no longer be supported by Section 110(5).
The authorities argued that an adjudicating authority had meanwhile issued a show cause notice under Section 124 of the Customs Act. They contended that they no longer had the authority to consider the firm’s request for defreezing and that it should instead approach the adjudicating authority.
The High Court rejected this contention. It pointed out that the freezing had been ordered at the instance of the DRI under Section 110(5), whose attachment power was expressly subject to a statutory time limit.
The later issuance of a show cause notice did not independently extend that period. Equally, the mere pendency of adjudication proceedings could not justify keeping the account provisionally attached after the maximum duration permitted by the statute.
The ruling thus distinguishes between the continuation of customs adjudication and the duration of a provisional bank account attachment: pending proceedings do not, by themselves, keep an expired attachment alive.
The firm also relied on the Supreme Court’s decision in Kesari Nandan Mobile v. Office of Assistant Commissioner of State Tax (2), Enforcement Division–5, Civil Appeal No. 9543 of 2025, decided on August 14, 2025.
As recorded in the High Court’s order, that decision concerned provisional attachment under Section 83 of the Central Goods and Services Tax Act. The Supreme Court emphasised that an attachment which had ceased to operate upon expiry of the statutory period could not be continued through administrative action.
Although that ruling arose under the GST law, the High Court considered the underlying principle relevant: a statutory authority cannot continue a provisional attachment beyond the period expressly permitted by the governing legislation. In this case, Section 110(5) itself fixed the maximum duration.
The High Court held that the continued freezing of the bullion account after expiry of the statutory period had no authority of law.
It directed that the DRI’s communication dated August 4, 2022 be treated as having ceased to operate through the expiry of that period. HDFC Bank was ordered to defreeze the account forthwith and permit the firm to operate it.
The court expressly preserved the authorities’ ability to take any other action permissible in law concerning the firm or the subject matter of the investigation. The relief therefore concerned the expired provisional attachment and did not prevent further lawful action.
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