A1 Adil Traders Vs Union of India
Date: November 16, 2025
Subject Matter
Provisional attachment order automatically ceases to have effect after one year
Summary
The High Court allowed the writ petition, declaring the provisional attachment of the petitioner’s bank accounts as void. The Court ruled that under the GST regime, a provisional attachment order automatically ceases to have effect after one year, and its continuation beyond that period is illegal.
ummary of Facts and Dispute:
Impugned Action: The 2nd Respondent (Revenue) issued orders in Form GST DRC-22 (dated 06.11.2024 and 11.11.2024) provisionally attaching three of the petitioner's bank accounts maintained with Axis Bank, HDFC Bank, and Gayatri Bank.
Statutory Basis: The attachment was carried out under Section 83(1) of the CGST Act, which empowers the Commissioner to attach property (including bank accounts) during the pendency of certain proceedings to protect government revenue.
The Lapse: The petitioner contended that the attachments had remained in force for more than a year. Specifically, the HDFC and Gayatri Bank accounts attached on 11.11.2024 were still frozen at the time of the hearing in late 2025.
Prior Order: The Court had already set aside the attachment of the Axis Bank Cash Credit account via an earlier order dated 20.08.2025.
Legal Provisions at Play:
The Court scrutinized the specific timelines mandated by the Act and Rules:
Section 83(2) of the CGST Act: Expressly states 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 159(2) of the CGST Rules: Reiterates that encumbrances shall be removed upon written instructions or on "expiry of a period of one year... whichever is earlier."
Ruling and Findings:
Automatic Cessation: The Court held that the law provides a hard "sunset clause" for provisional attachments. Once the period of one year from the date of the DRC-22 order expires, the attachment loses its legal validity by operation of law.
Violation of Statute: The Revenue failed to demonstrate that the attachment was lifted or renewed (if legally permissible under fresh circumstances). Consequently, the attachment of Account Nos. 16302000001397 (HDFC) and 100002104012345 (Gayatri Bank) had "outlived" the statutory life prescribed under Section 83(2).
Setting Aside: The Court formally set aside the provisional attachments and the letter dated 15.01.2025, declaring them arbitrary and without the authority of law.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
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 2nd 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 2nd 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 sub-rule (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.