M/S Mansi Overseas vs. Principal Commissioner Of Goods And Service Tax, East Delhi & Anr.

Facts

The petitioner, M/s Mansi Overseas, approached the Delhi High Court challenging an order dated 12 May 2020, which provisionally attached its bank account with United Bank of India. This attachment was purportedly made under Section 83 of the Central Goods and Services Tax Act, 2017. The petitioner contended that the attachment could not continue beyond 12 months. The respondents, represented by the Principal Commissioner of Goods and Services Tax, East Delhi, conceded that the provisional attachment could not exceed 12 months and confirmed that no fresh order under Section 83 had been issued. Although a Show Cause Notice was issued after the investigation concluded, the Court considered this insufficient to sustain the continued attachment.

Held

The Court allowed the writ petition and quashed the continuance of the provisional attachment order dated 12 May 2020. The Court found that the provisional attachment, even if initially valid, could not lawfully continue beyond the period of 12 months as stipulated by the law. The mere issuance of a Show Cause Notice subsequent to the conclusion of the investigation was deemed insufficient to sustain the continued attachment beyond this statutory period. The respondents' concession that the attachment could not exceed 12 months and that no fresh order had been issued reinforced this finding. The Court directed the respondents to issue appropriate clarificatory directions to the Branch Manager of United Bank of India forthwith, communicating the quashing of the attachment. The ratio decidendi is that a provisional attachment under Section 83 of the CGST Act, 2017, is time-bound and cannot be extended beyond 12 months without a fresh order, and the issuance of a Show Cause Notice alone does not validate its continuance.

Key Issues

1. Whether the provisional attachment of the petitioner's bank account, initiated by an order dated 12 May 2020 under Section 83 of the Central Goods and Services Tax Act, 2017, could lawfully continue beyond a period of 12 months, given that no fresh order had been issued and only a subsequent Show Cause Notice was served. Petitioner's Argument: The petitioner argued that the provisional attachment was time-bound and could not persist beyond 12 months. The issuance of a Show Cause Notice after the investigation concluded was not sufficient to validate the continued attachment. Revenue's Argument: The respondents conceded that the provisional attachment could not continue beyond 12 months and stated that no fresh order under Section 83 had been issued. They did not present any argument to sustain the continued attachment beyond the statutory period.