Section 83 of the CGST Act, 2017, empowers the Commissioner to provisionally attach property, including bank accounts and immovable assets, to protect the interests of revenue during the pendency of certain proceedings. The power is extraordinary in nature and is subject to strict conditions and a one-year limitation.
This article explains the grounds for provisional attachment under Section 83, the procedural requirements, and the remedies available to affected taxpayers.
Grounds for Provisional Attachment
Section 83 provides that provisional attachment can be made when the Commissioner is of the opinion that it is necessary to do so to protect the interests of revenue. The power can be exercised during the pendency of proceedings under:
- Section 62 (assessment of non-filers of returns).
- Section 63 (assessment of unregistered persons).
- Section 64 (summary assessment in special cases).
- Section 67 (inspection, search, and seizure).
- Section 73 or 74 (demand proceedings).
- Section 129 or 130 (detention, seizure, and confiscation).
The Commissioner must record the reasons in writing and form an opinion based on tangible evidence.
What Can Be Attached
Provisional attachment can cover:
- Movable property: Including bank accounts, fixed deposits, and investments.
- Immovable property: Including land and buildings.
- Property of beneficiaries: The provision allows attachment of properties belonging to persons other than the taxable person, such as beneficiaries of fraudulent transactions.
The One-Year Limitation
The most important safeguard for taxpayers is the one-year limitation. Provisional attachment under Section 83 is valid for one year from the date of the order. After one year, the attachment automatically ceases unless a fresh order is passed. The Delhi High Court and Madras High Court have both held that banks must de-freeze accounts after one year unless a fresh order is served.
Bombay High Court Ruling on Cash Credit Accounts
The Bombay High Court has held that a cash credit account cannot be treated as property of the account holder that can be attached under Section 83. A cash credit account is a facility, not an asset, and the bank is the owner of the funds until they are disbursed.
Procedural Requirements
The following procedural requirements must be satisfied:
- The Commissioner must record the reasons in writing.
- The attachment order must be in Form GST DRC-22 .
- A copy of the order must be sent to the affected person.
- The attachment must be reported to the Commissioner within 24 hours.
Remedies Available to Taxpayers
- File objections: The taxpayer can file objections before the Commissioner seeking release of the attachment.
- Apply for release: The Commissioner can release the attachment in Form GST DRC-23 if satisfied that the attachment is no longer necessary.
- File an appeal: If the attachment is arbitrary or without jurisdiction, an appeal can be filed before the High Court.
- One-year lapse: If the attachment has lapsed after one year, apply for release with supporting documentation.
Practical Steps for Taxpayers
- Obtain a copy of the attachment order and verify the grounds.
- Assess whether the attachment is proportionate to the alleged liability.
- File an application for release under Form DRC-23 with supporting evidence.
- Follow up with the bank to ensure that the attachment is lifted once released.
- If the attachment is illegal, challenge it before the High Court.
Conclusion
Provisional attachment under Section 83 is a powerful tool for the department but is subject to strict conditions and a one-year limitation. Taxpayers must act promptly to challenge any unjustified attachment and seek release.
At Anuj Desai & Associates, we provide expert representation services for provisional attachment matters. Our team can help you challenge the attachment and secure release of your assets.
For a confidential consultation, contact us at office@anujdesaiassociates.com or call 9619456656. Visit our website at https://anujdesaiassociates.com or connect with our founder on LinkedIn at linkedin.com/in/ca-anuj-desai-122547230.