M/S Vks Industries vs. Commissioner, Central Excise And CGST

Facts

The petitioner, M/S VKS INDUSTRIES, filed a writ petition before the Delhi High Court seeking a direction to the respondent, Commissioner, Central Excise and CGST, to set aside an order dated 06.02.2020 and to defreeze its Axis Bank account. The respondent had provisionally attached the petitioner's bank account under Section 83 of the CGST Act, 2017. The attachment order was dated 06.02.2020. The petitioner contended that the attachment order had lapsed. The respondent's counsel conceded that no further orders extending the attachment or any other orders freezing the account had been passed after the initial order dated 06.02.2020. A show cause notice was issued to the petitioner on 30.07.2021, which remained unadjudicated.

Held

The Court held that the provisional attachment order dated 06.02.2020, passed under Section 83 of the CGST Act, 2017, had ceased to have effect. This conclusion was based on Section 83(2) of the CGST Act, which mandates that such provisional attachments shall cease to have effect after the expiry of one year from the date of the order. As the order was dated 06.02.2020, it became inoperative after 06.02.2021. The Court noted that the respondent's counsel conceded that no further orders had been passed to extend the attachment or to freeze the bank account. Therefore, the Court allowed the petition, directing that the order dated 06.02.2020 was no longer operative. The Axis Bank was directed to permit the petitioner to operate the bank account, provided there was no other order from any other authority freezing it. The Court refrained from examining the validity of the subsequent show cause notice, as the petitioner's relief was limited to the de-freezing of the bank account.

Key Issues

1. Whether the provisional attachment of the petitioner's bank account, made by an order dated 06.02.2020 under Section 83 of the CGST Act, 2017, has ceased to have effect. The petitioner argued that Section 83(2) of the CGST Act, 2017, stipulates that a provisional attachment ceases to have effect after one year from the date of the order. Therefore, the attachment order dated 06.02.2020 expired on 06.02.2021 and is no longer operative. The respondent, represented by the Commissioner, Central Excise and CGST, did not dispute the expiry of the attachment order. The respondent's counsel fairly stated that no further orders extending the attachment or any other orders freezing the bank account had been passed after the initial order dated 06.02.2020. The respondent did not present any arguments to counter the petitioner's claim that the attachment had lapsed.