Case Summary
Eunike General Trading v. Commissioner of Goods and Service Tax, West Delhi
Delhi High Court | W.P.(C) 3209/2023 | Decision dated 16 March 2023
Issue: Provisional Attachment under Section 83 – Refund Blocking
Facts of the Case (Paras 1–9)
The petitioner received a sanctioned refund of ₹34,48,080, credited into its bank account (para 1). Subsequently, during audit and review, the petitioner was directed to deposit ₹38,786 alleged to be excess refunded, which it voluntarily deposited (para 2–3). Despite such compliance, the balance refund amount remained blocked by the respondent.
The petitioner argued that blocking the account indefinitely without statutory backing was impermissible and that if the department believed the refund was erroneous, it should act under Section 107(2) (review) or other statutory provisions (para 4). The respondent highlighted that the petitioner had filed an earlier writ petition seeking identical relief—W.P.(C) 16739/2022—wherein the Delhi High Court confined the attachment to ₹50 lakh through an order dated 15.12.2022 (paras 5–7).
The earlier attachment order under Section 83 was based on three departmental suspicions: (i) mismatch in payment to supplier, (ii) doubt on procurement of goods, and (iii) procurement from another supplier whose registration was cancelled suo motu (para 7).
Questions / Issues (Derived from Pleadings & Court’s Consideration)
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Whether the continued blocking of the petitioner’s bank account beyond one year is legally sustainable under Section 83(2) of the CGST Act?
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Whether the department must mandatorily invoke Section 107(2) or Sections 73/74 upon being of the view that the refund was erroneously sanctioned?
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Whether administrative letters issued to banks without a formal Section 83 order constitute lawful attachment?
Court’s Observations (Paras 10–13)
The Court held that the petitioner’s contention that the department must immediately file a review or appeal under Section 107(2) is prima facie untenable (para 10). Instead, Sections 73 and 74 sufficiently empower the department to initiate recovery of erroneously granted refunds (para 11). Recourse to Section 107(2) is required only where an adjudicating authority has decided a contentious issue warranting review.
Significantly, the Court reaffirmed that the blocking of a bank account is governed exclusively by Section 83, and under Section 83(2), any order of provisional attachment automatically ceases after one year (para 12). Authorities must strictly adhere to this statutory limitation.
Given that the audit review found only ₹38,786 refundable to the Government and that amount had already been repaid, the Court directed the respondent to reconsider continuation of the bank-account block and maintain it only if Section 83 conditions demonstrably continue to exist (para 13).
Judgment / Final Directions (Para 14)
The writ petition was disposed of with directions that:
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The respondent shall reconsider the petitioner’s request to lift the attachment.
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The attachment may continue only if statutory pre-conditions under Section 83 subsist.
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All pending applications were disposed of (para 14).
Relevant Statutory Provisions
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Section 83, CGST Act – Provisional attachment to protect revenue interests.
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Section 83(2), CGST Act – Attachment ceases after one year.
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Sections 73 & 74, CGST Act – Recovery of erroneous refunds (non-fraud and fraud).
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Section 107(2), CGST Act – Departmental review of adjudication orders.
Classification of the Case under GST Act, 2017
Category: Refund – Provisional Attachment under Section 83
Sub-Classification: Erroneous Refund – Recovery Mechanism – Limitation of Attachment
Cases Referred (Summary Table)
| Case Referred | Issue | Court’s View | Relevance |
|---|---|---|---|
| Eunike General Trading v. Commissioner of GST, West & Ors., W.P.(C) 16739/2022 | Validity of blocking refund via bank-account freeze | Court restricted attachment to ₹50 lakh and required formal Section 83 order | Forms the legal backdrop for current writ; earlier directions govern ongoing attachment |
(Source: Paras 5–9 of present case)
Between Fine Lines (Practical Takeaways for Trade/Industry)
Businesses must note that a provisional attachment under Section 83 cannot be extended indefinitely and automatically lapses after one year. Departments must justify continuation of attachment based on live and tangible material. Erroneous refunds cannot be withheld by blocking bank accounts; instead, proper proceedings under Sections 73/74 must be initiated. Any bank-account blocking without a valid Section 83 order is ultra vires.
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