The Bombay High Court has affirmed that provisional attachment of bank accounts under the CGST Act is strictly time-bound, reinforcing that statutory limits cannot be overridden by administrative inertia. This ruling provides immediate clarity to businesses facing prolonged freezes without formal adjudication.
Background & Facts
The Dispute
The petitioner, Aurosis Enterprises, had its current bank account No. 42286265606, held at State Bank of India, Padam Singh Road, Karol Bagh, New Delhi, provisionally attached by an order issued under Section 83 of the Central Goods and Services Tax Act, 2017. The attachment was effected through Form GST DRC-22, issued on 19.12.2024 by the Additional Director General, GST Intelligence, Pune, under Reference No. DGGI/INV/GST/2965/2024-GrC-O/o ADG-DGGI-ZU-PUNE.
Key Facts
- The attachment was issued as a provisional measure under Section 83(1) of the CGST Act, 2017, pending investigation into alleged tax evasion.
- The order was digitally signed by M.S. Thatte on 19.12.2024.
- No final order of confiscation, demand, or adjudication had been passed as of the date of the writ petition.
- The petitioner had not been granted any opportunity for hearing prior to attachment.
- The petitioner filed this writ petition on 29.04.2025, over four months after the attachment.
Procedural History
- 19.12.2024: Provisional attachment order issued under Section 83(1) of the CGST Act.
- 29.04.2025: Writ Petition No. 926 of 2025 filed before the Bombay High Court under Article 226 of the Constitution.
- 29.04.2026: Hearing conducted before the Division Bench of Justices G.S. Kulkarni and Aarti Sathe.
Relief Sought
The petitioner sought:
- Quashing of the attachment order dated 19.12.2024;
- A writ of mandamus directing the respondents to immediately de-freeze the bank account No. 42286265606;
- A declaration that the attachment had lapsed by operation of law.
The Parties' Positions / Positions Before This Court
The petitioner contended that the attachment had become void by virtue of Section 83(2), which mandates that provisional attachment shall not remain in force beyond one year from the date of issue, unless extended by a written order of the Commissioner. No such extension was produced.
The respondents, represented by Mr. Jitendra B. Mishra, did not dispute the lapse of the one-year period. They relied on a reply filed by Mr. Rahul Shukla, Additional Director General, GST Intelligence, which acknowledged the passage of time but argued that the underlying investigation remained pending.
The Legal Issue
The central question was whether Section 83(2) of the CGST Act, 2017 permits a provisional attachment to remain in force beyond one year without a written extension by the Commissioner, and whether administrative pendency of investigation can override this statutory limitation.
Arguments Presented
For the Petitioner
Learned counsel for the petitioner relied on the plain language of Section 83(2), which states: "The provisional attachment shall not remain in force for a period exceeding one year from the date of issue of the order." He argued that the provision is mandatory, not directory, and that the legislature intended to prevent indefinite deprivation of property without adjudication. He cited State of Maharashtra v. M/s. R.K. Industries to emphasize that statutory timelines in tax enforcement are jurisdictional.
For the Respondent
The respondents conceded that the one-year period had expired but contended that the attachment should remain effective until final adjudication, as the investigation was ongoing and the petitioner had not been exonerated. They argued that the purpose of provisional attachment - to prevent dissipation of assets - would be defeated if the attachment lapsed automatically.
The Court's Analysis
The Court examined the text of Section 83(2) and found no ambiguity. The provision is unqualified: "shall not remain in force for a period exceeding one year." The Court held that the legislature deliberately imposed a hard cap to balance enforcement needs with fundamental rights to property and livelihood.
"The statutory limit of one year under Section 83(2) is not a mere procedural formality; it is a substantive safeguard against indefinite executive action. Once the period expires, the attachment ceases by operation of law, irrespective of the status of the investigation."
The Court rejected the argument that pending investigation justifies continued attachment. It noted that the CGST Act provides other mechanisms - such as final demand notices, adjudication, and confiscation orders - to secure revenue. Provisional attachment is an extraordinary, temporary measure, not a substitute for due process.
The Court further observed that the respondents had not produced any written order extending the attachment beyond one year, as required by the proviso to Section 83(2). Absent such an order, the attachment had no legal force after 19.12.2025.
The Verdict
The petition succeeded. The Court declared that the provisional attachment order dated 19.12.2024 had lapsed by operation of law under Section 83(2) of the CGST Act. The bank account No. 42286265606 held at State Bank of India, Karol Bagh, New Delhi, is hereby de-freezed. The State Bank of India is directed to act on an authenticated copy of this order. No costs were awarded. All other contentions between the parties were expressly kept open.
What This Means For Similar Cases
Statutory Time Limits Are Jurisdictional
- Practitioners must immediately challenge any attachment exceeding one year without written extension, regardless of investigation status.
- The burden is on the tax authority to prove a valid extension; mere pendency of proceedings is insufficient.
- Any continued freeze after the one-year period is unlawful and actionable under Article 226.
Enforcement Must Follow Due Process
- Provisional attachment cannot be used as a tool of prolonged coercion.
- Tax authorities must complete adjudication within the statutory window or seek formal extension with reasons.
- Businesses can now confidently resume operations upon expiry of the one-year period, even if notices remain pending.
Practical Takeaways for Practitioners
- Always calculate the one-year expiry date from the date of the attachment order.
- File writ petitions immediately upon expiry if no extension is produced.
- Demand certified copies of any extension order under Section 83(2) proviso.
- Cite this judgment to oppose prolonged freezes in other jurisdictions.
