Source: Delhi High Court

Why in News?

Recently, the Delhi High Court in the matter of M/S Krish Overseas v. Commissioner Central Tax-Delhi West & Ors., has held that the life of an order of provisional attachment is only one year.

What was the Background of M/S Krish Overseas v. Commissioner Central Tax-Delhi West & Ors. Case?

• In this case, before the Delhi High Court the petitioner impugns communication dated 14^th August 2019 issued under Section 83 of the Central Goods and Service Tax Act, 2017 (CGST Act) to the Branch Manager, HDFC Bank Ltd. to seize the outward movement of funds from the bank account of the petitioner.
• The learned counsel for petitioner submits that the validity of an order under Section 83 of the CGST Act is one year and despite the passage of one year, the Bank is not permitting the operation of the said account.
• Accordingly, the High Court declared that the order dated 14^th August 2019 ceases to have effect. Consequently, respondent HDFC Bank henceforth cannot restrain operation of the bank account of the petitioner based solely on the basis of this order.

What were the Court’s Observations?

• The bench comprising of Justices Sanjeev Sachdeva and Ravinder Dudeja observed that in view Section 83 (2) of the CGST Act, the life of an order of provisional attachment is only one year.
• The Court further clarified that this order would be without prejudice to any other order of provisional attachment issued by either the respondents or any other authority communicated to the HDFC Bank.

What is Section 83 of the CGST Act?

CGST Act

• This Act makes provision for levying and collection of tax on intra-State supply of goods or services or both by the Central Government and for matters connected therewith.

Section 83 of CGST Act

• This Act deals with the provisional attachment to protect revenue in certain cases. It states that-

(1) Where during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property, including bank account, belonging to the taxable person in such manner as may be prescribed.

(2) Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1).

Essential Elements of Section 83

• This section empowers the Commissioner to provisionally attach any property including a bank account.
• The property must belong to a taxable person.
• The attachment of the property must be done for the purpose of protecting the interest of the Government revenue.
• Every provisional attachment ceases to have effect after the expiry of a period of one year from the date said order.