The Supreme Court has ruled that renewing lapsed provisional attachment orders under the Central Goods and Services Tax (CGST) Act lacks legal sanction. This decision came in response to a case involving RHC Global Exports Pt. Ltd., where the Supreme Court directed the lifting and defreezing of bank account attachments.
“Sub-section (2) of Section 83 Cannot Be Reduced to a Dead Letter by Allowing Fresh Orders on the Same Grounds” Supreme Court of India decisively ruled that a second provisional attachment order cannot be issued after the first has lapsed under Section 83(2) of the CGST Act, 2017. The Court declared that the CGST Act does not empower revenue authorities to ‘renew’ attachment orders once they expire by operation of law after one year.
A bench comprising Justices Dipankar Datta and Augustine George Masih set aside fresh attachment orders issued by the Assistant Commissioner of State Tax, Enforcement Division-5, which sought to freeze the bank accounts of the appellant beyond the statutory one-year limit.
The court held that Section 83(2) of the Act explicitly provides for the one-year limit, and there’s no statutory provision that allows for its extension, renewal, or re-issuance. It noted that permitting a second attachment would effectively circumvent the law and constitute an abuse of power. The court also observed that the respondent’s failure to address the petitioner’s representations under Rule 159(5) before issuing the second order was a violation of due process. This judgment clarifies that executive instructions or procedural misalignments cannot override the clear legislative intent to limit provisional attachments to one year, reinforcing the need for strict compliance with statutory provisions and procedural safeguards.
Implications:
– Protection of Taxpayers’ Rights: This ruling protects taxpayers from arbitrary and excessive actions by tax authorities, ensuring that their rights are safeguarded.
– Clarity on Provisional Attachments: The judgment provides clarity on the treatment of provisional attachments under the CGST Act, emphasizing the importance of adhering to the statutory time frames.
Provisional attachment orders under the CGST Act cannot be renewed or reissued once they have lapsed after one year. This means that tax authorities cannot repeatedly freeze bank accounts without a fresh basis for attachment.
