Once GST Demand Quashed and Remanded, Provisional Attachment cannot Survive: Delhi HC [Read Order]

The Delhi High Court has held that once a GST ( Goods and Services tax ) demand is quashed and the matter is remanded for fresh adjudication, any provisional attachment made pursuant to such demand cannot survive.

The Court set aside the provisional attachment of the petitioner’s bank account, observing that the very foundation for invoking Section 83 of the CGST Act had ceased to exist.

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M/s Puneet Chemicals, filed writ petition challenging the provisional attachment of its HDFC Bank account by the Department of Trade and Taxes, GNCTD. The attachment was ordered under Section 83 of the CGST Act in connection with proceedings initiated under Section 73, resulting in GST demands for multiple financial years

The attached bank account was frozen pursuant to three separate GST demand orders for the financial years 2017-18, 2018-19, and 2019-20, aggregating to huge tax liabilities. One of these demand orders had already been challenged before the High Court in an earlier writ petition.

By an order dated 26 November 2025, the Court had set aside the demand, subject to payment of costs, and remanded the matter back to the adjudicating authority for fresh consideration after granting the petitioner an opportunity to file replies and be heard.

The petitioner argued that since the primary GST demand itself had been quashed and the proceedings stood reopened, the provisional attachment of its bank account could no longer be legally sustained.

It was also contended that the attachment letter had been issued by a GST Officer and not by the Commissioner, raising additional concerns regarding the validity of the action.

JusticesPrathiba M. Singh and Renu Bhatnagar agreed with the petitioner’s submission and held that once the demand has been set aside and the matter remanded, the provisional attachment order issued on the basis of such proceedings automatically loses its force.

The Court observed that the attachment could not continue when the very basis for protecting the alleged revenue interest no longer existed.

Accordingly, the Court set aside the provisional attachment of the petitioner’s bank account. However, it clarified that if any fresh adverse order is passed against the petitioner after remand, the department would be at liberty to take action in accordance with law.

Therefore the petition was disposed of.

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