Greenfinch Team Management (P) LTD vs. Union Of INDIA

Held

The Court held that both provisional attachment orders, dated December 2, 2019, and December 8, 2021, had spent their force and could not continue beyond the period prescribed under Section 83(2) of the CGST Act. The Court reasoned that Section 83(1) empowers the Commissioner to provisionally attach property, including bank accounts, to protect revenue during pending proceedings under specified sections. However, Section 83(2) explicitly states that such attachment shall cease to have effect after one year from the date of the order. The Court emphasized that by its very nature, a provisional attachment cannot be for an indefinite period, and the legislature has provided a definite timeline to protect the valuable rights of a taxable person. Consequently, the Court quashed both provisional attachment orders. The Court explicitly stated that it had not expressed any opinion on the pending proceedings against the petitioner under Sections 67(2) and 74 of the CGST Act. The Court directed respondent No. 2 to communicate the quashing of the orders to all the petitioner's bankers.

Facts

The petitioner challenged two provisional attachment orders issued under Section 83 of the Central Goods and Services Tax (CGST) Act, 2017. The first order was dated December 2, 2019, issued by the Additional Director General, Directorate General of GST Intelligence, Hyderabad Zonal Unit, attaching the petitioner's bank account with ICICI Bank. The second order, dated December 8, 2021, was issued by the Principal Additional Director General, attaching the petitioner's bank account with Corporation Bank. The petitioner argued that both orders had lapsed due to the time limit prescribed under Section 83(2) of the CGST Act. The respondents contended that investigations were ongoing against the petitioner under Section 67 of the CGST Act and lifting the attachment could prejudice the revenue's interest.

Key Issues

1. Whether the provisional attachment orders dated December 2, 2019, and December 8, 2021, issued under Section 83 of the CGST Act, have ceased to have effect due to the expiry of the one-year period stipulated in Section 83(2) of the CGST Act. Petitioner's arguments: The petitioner contended that Section 83(2) of the CGST Act mandates that a provisional attachment shall cease to have effect after the expiry of one year from the date of the order. Therefore, both attachment orders, having exceeded this period, are no longer valid. The petitioner relied on judgments from various High Courts supporting this statutory mandate. Revenue's arguments: The respondents argued that investigations were ongoing against the petitioner under Section 67 of the CGST Act. They submitted that if the attachment were lifted, there was a possibility of the petitioner withdrawing deposited amounts, which could prejudice the interests of the revenue. They sought time to file an affidavit.