A second provisional attachment order issued under Section 83 of GST ( Goods and Services Tax ) Act cannot be issued without providing fresh reasons, ruled the Allahabad High Court. Without proper justification, the attachment order is arbitrary.
A writ petition challenging a provisional attachment order dated May 16, 2024. This order, issued under Section 83 of the CGST Act, targeted the same bank account that had previously been attached by an order dated February 16, 2023.
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Following the expiration of the one-year period for the initial attachment, the petitioner had sought its removal. The coordinate bench of the court had indeed ordered the removal of the attachment on May 6, 2024.
However, just ten days after this order, a new provisional attachment notice was issued without any fresh justification. The notice did not acknowledge that the attachment was being renewed or provide any specific reasons for its necessity. This lack of explanation led the petitioner to argue that the action was arbitrary and lacked legal basis.
The Allahabad High Court, reviewing the case, found that such a procedure violated the principles of fairness and legal propriety. According to Section 83 of the CGST Act, a provisional attachment can only be imposed to protect government revenue during the pendency of specific proceedings. Importantly, Sub-section 2 of this section mandates that such an attachment must cease after one year. Therefore, issuing a second provisional attachment without new grounds effectively contravenes the intent and letter of the law.
The court also referenced the Supreme Court’s judgment in Radha Krishan Industries vs. State of Himachal Pradesh, which stated that a second provisional attachment order is permissible only if fresh reasons are provided. The ruling clarified that without a material change in circumstances, repeating an attachment order based on the same grounds was impermissible.
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Further supporting the court’s decision was the Calcutta High Court’s stance in Amazonite Steels Pvt. Ltd. vs. Union of India, which mentioned that provisional attachments are severe measures akin to preventive detention and must be justified with concrete reasons to ensure they are not arbitrary.
Thus, based on these observations, the bench of Justice Shekhar B. Saraf and Justice Manjive Shukla Allahabad High Court quashed the provisional attachment order dated May 16, 2024.
The bench stated that “In light of the above, it becomes extremely necessary for the Department to justify the reasons for such a provisional attachment and without such justification being provided by the Department, by way of specific reasons, such provisional attachment would be illegal, arbitrary and non est in law. In the present facts and circumstances of the case, we do not find recording of any such reasons.”
The bank was instructed to lift the attachment, allowing the petitioner access to their account. However, it was also clarified that the department have the liberty to proceed in accordance with law.
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