Case Title: Merlin Facilities (P.) Ltd. v. Union of India
Court: High Court of Delhi
Petition Number: W.P.(C) No. 5931 of 2023, CM APPL. Nos. 23273-23274 of 2023
Relevant Section: Section 83 of the Central Goods and Services Tax Act, 2017
Category of Dispute: Provisional Attachment under CGST
Date of Judgement: May 8, 2023
Relevant Provision: Section 83(2) of the CGST Act, 2017
Facts of the Case [¶1–3]:
- The petitioner, Merlin Facilities (P.) Ltd., challenged an order dated 13.01.2021 issued under Section 83 of the CGST Act provisionally attaching three of its bank accounts across ICICI Bank, PNB (formerly Oriental Bank), and Axis Bank [¶1].
- The respondents alleged that the petitioner was a non-existent entity and failed to cooperate in the investigation [¶2].
- It was, however, not disputed that no recovery proceedings or further orders were passed post attachment [¶3].
Questions in Consideration [¶4–5]:
- Whether the provisional attachment order under Section 83 of the CGST Act survives beyond the period of one year from its date of issuance.
- Whether the petitioner is entitled to operate its bank accounts after expiry of the attachment order.
Observations of the Court [¶4–7]:
- The Court cited Section 83(2) of the CGST Act, which mandates that any provisional attachment order ceases to have effect after one year from its date [¶4].
- The Court observed that the attachment order dated 13.01.2021 had lapsed by operation of law, as no extension or further proceedings had been initiated [¶5–6].
- Consequently, there was no requirement to formally set aside the impugned order, as it was no longer in force [¶6].
- The banks were directed to treat the attachment order as inoperative, and the petitioner was permitted to operate the attached bank accounts freely [¶7].
Judgement of the Court [¶8]:
- The petition was disposed of with directions that the impugned attachment order had ceased to be operative.
- The petitioner was permitted to operate its bank accounts without any impediment from the lapsed order [¶8].
Between Fine Lines:
- The High Court clarified that provisional attachment under Section 83 of CGST automatically lapses after one year.
- No active step is required from the taxpayer for removal if the time period expires without further orders.
- Tax authorities must act within one year or renew attachment through fresh valid orders.
- Banks are expected to update account status based on statutory timelines, not merely on official communication.
- This judgment protects taxpayers from indefinite hardship due to inactive attachments.
Summary of Referred Cases:
No other cases were referred to or cited in this judgment.
Takeaway:
“Expiry Kills Attachment: A Time-Bound Shield Under Section 83 of CGST”
