TaxHeal - GST and Income Tax Complete Guide Portal

GST provisional bank attachment ceases automatically after one year per Section 83(2) statutory limit

Issue

Whether a provisional attachment of bank accounts under Section 83(1) of the CGST Act remains valid beyond a period of one year from the date of the order, or if it ceases to have effect by operation of law under Section 83(2).

Facts

The Challenge: The petitioner filed a writ petition challenging the provisional attachment orders issued in Form GST DRC-22 under Section 83(1) of the CGST/Telangana GST Act.
Extent of Attachment: The orders originally attached three bank accounts belonging to the petitioner.
Partial Relief: In earlier proceedings, the attachment regarding one of the accounts had already been set aside.
The Dispute: The attachments on the remaining two accounts continued to be enforced by the authorities.
Time Bar: The petitioner contended that these attachments (dated 11.11.2024) had persisted for more than one year, violating the statutory time limit.

Decision

Statutory Expiry: The High Court relied on Section 83(2) of the CGST Act, which mandates that every provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order.
Rule Support: The Court noted that Rule 159(2) further supports this by indicating that attachment is removed either on Commissioner’s instructions or upon the expiry of one year.
Operation of Law: Since the attachments on the two accounts had outlived the statutory period of one year, their continuation was legally impermissible.
Order Quashed: The provisional attachment orders dated 11.11.2024 were set aside. The writ petition was allowed, effectively directing the release of the bank accounts.

Key Takeaways

The One-Year Sunset Clause: Section 83(2) provides an absolute time limit. A provisional attachment order lives for exactly one year. On the 366th day, it becomes invalid by operation of law, and the bank is legally bound to unfreeze the account.

No Extension: The Revenue authorities do not have the statutory power to extend a specific provisional attachment order beyond this one-year period.

Automatic Cessation: While the law says it ceases “automatically,” in practice, banks often require a court order or a release letter from the Department. This judgment serves as the authority to compel such release.

HIGH COURT OF TELANGANA

A1 Adil Traders

Union of India

APARESH KUMAR SINGH, CJ.
and G.M. MOHIUDDIN, J.

WRIT PETITION No. 3871 of 2025

NOVEMBER 17, 2025

V. Veeresham and Uma Shankar, learned counsels for the Petitioner. P. Shashi Kiran, Ms. Pravalika, Ms. Muvva R.A.Sri Lakshm, learned counsels and Dominic Fernandes, learned Senior Standing Counsel for the Respondent.

ORDER

1. Heard Mr. Uma Shankar, learned counsel representing Mr. V.Veeresham, learned counsel for the petitioner, Mr. P.Shashi Kiran, learned counsel for respondent No.1, Ms. Pravalika, learned counsel representing Mr. Dominic Fernandes, learned Senior Standing Counsel for Central Board of Indirect Taxes and Customs (CBIC) appearing for respondent No.2 and Ms. Muvva R.A.Sri Lakshmi, learned counsel for respondent No.6.

2. Writ petition has been preferred with the following prayer:

“For all the reasons stated in the accompanying affidavit, it is prayed that this Hon’ble High Court may be pleased to issue a writ, order, or direction more particularly one in the nature of a Writ of Mandamus

(i)

To declare DRC 22 dated 11.11.2024 issued to HDFC Bank (Respondent No.6) (Account No. 16302000001397) and DRC 22 dated 11.11.2024 issued to Gayatri Bank (Respondent No.7) (Account No. 100002104012345) by the 2^nd Respondent under the provisions of CGST/TGST Act, 2017 as being void, arbitrary, illegal, without jurisdiction and without authority of law apart from being violative of Articles 14, 19(1)(g) and 265 of the Constitution of India, and to consequently set aside any action taken pursuant thereto and pass such further or other order(s) as this Hon’ble Court may deem fit and proper in the circumstances of the case.

(ii)

To declare the DRC 22 dated 06.11.2024 issued to Axis Bank Cash Credit Account (Respondent No.5) (No. 919030082843038) by the 2^nd Respondent as being void, arbitrary, illegal, without jurisdiction and without authority of law apart from being violative of Articles 14, 19(1)(g) and 265 of the Constitution of India and/or pass such further or other order(s) as this Hon’ble Court may deem fit and proper in the circumstances of the case.

(iii)

To declare the letter dated 15.01.2025 issued by Respondent No. 2 as being void, arbitrary, illegal, without jurisdiction and without authority of law apart from being violative of Articles 14, 19(1)(g) and 265 of the Constitution of India and/or pass such further or other order(s) as this Hon’ble Court may deem fit and proper in the circumstances of the case.”

3. By the impugned orders, three accounts of the petitioner were provisionally attached under Section 83(1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as ‘the CGST Act’). By our earlier order dated 20.08.2025, the provisional attachment of Bank Account No.919030082843038 attached on 06.11.2024 maintained in Axis Bank, Jagtial Branch, Telangana was set aside. The provisional attachment as respects the other two accounts remain. The relevant provisions as relating to provisional attachment are Section 83 of the CGST Act and Rule 159 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as ‘the CGST Rules’), which are extracted hereunder:

“83. Provisional attachment to protect revenue in certain cases

(1)

Where, after the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV, 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 or any person specified in sub-section (1A) of section 122, 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).”

“159. Provisional attachment of property

(1)

Where the Commissioner decides to attach any property, including bank account in accordance with the provisions of section 83, he shall pass an order in FORM GST DRC-22 to that effect mentioning therein, the details of property which is attached.

(2)

The Commissioner shall send a copy of the order of attachment in FORM GST DRC-22 to the concerned Revenue Authority or Transport Authority or any such Authority to place encumbrance on the said movable or immovable property, which shall be removed only on the written instructions from the Commissioner to that effect or on expiry of a period of one year from the date of issuance of order under sub-rule (1), whichever is earlier, and a copy of such order shall also be sent to the person whose property is being attached under section 83.

(3)

Where the property attached is of perishable or hazardous nature, and if the person, whose property has been attached, pays an amount equivalent to the market price of such property or the amount that is or may become payable by such person, whichever is lower, then such property shall be released forthwith, by an order in FORM GST DRC-23, on proof of payment.

(4)

Where such person fails to pay the amount referred to in subrule (3) in respect of the said property of perishable or hazardous nature, the Commissioner may dispose of such property and the amount realized thereby shall be adjusted against the tax, interest, penalty, fee or any other amount payable by such person.

(5)

Any person whose property is attached may, file an objection in FORM GST DRC-22A to the effect that the property attached was or is not liable to attachment, and the Commissioner may, after affording an opportunity of being heard to the person filing the objection, release the said property by an order in FORM GST DRC-23.

(6)

The Commissioner may, upon being satisfied that the property was, or is no longer liable for attachment, release such property by issuing an order in FORM GST DRC- 23.”

4. The provisional attachment of the above two accounts have remained for more than one year by now. In terms of Sub-Section (2) of Section 83 of the CGST Act, 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). Sub-Rule (2) of Rule 159 of the CGST Rules also indicates that such attachment could be removed or on the expiry of period of one year from the date of issuance of the order under Sub-Rule (1), whichever is earlier, on the written instructions of the Commissioner to that effect. It is, therefore, evident that the provisional attachment of the aforesaid two accounts have out lived the period prescribed under Section 83(2) of the CGST Act read with Rule 159 of the CGST Rules.

5. Learned counsel for the CBIC is not in a position to state whether the attachment has been lifted after expiry of one year.

6. However, such provisional attachment cannot continue beyond the expiry of one year in terms of Section 83(2) of the CGST Act. Therefore, the provisional attachment of the aforesaid two accounts No.16302000001397 and 100002104012345 as per Form GST DRC-22 dated 11.11.2024 are set aside.

7. The Writ Petition is allowed in the manner indicated above. However, there shall be no order as to costs.

Miscellaneous applications pending, if any, shall stand closed.