Provisional Attachment Invalidated Post Final Assessment Order

Case Title: Om Prakash Gupta v. Pr. Additional Director General DGGI & Ors.
Court: Delhi High Court
Petition Number: W.P.(C) 11000/2024 & CM APPL. 29085/2025
Category of Dispute: Provisional Attachment under Section 83, Input Tax Credit
Date of Judgment: 14 May 2025
Relevant Sections: Section 83 and Section 74 of CGST Act, Rule 159(5) of CGST Rules
Final Order Reference: Section 74 CGST Order passed on 20 June 2024

⚖ Facts of the Case

[Para 2, 3, 4, 6]:

• Petitioner challenged:
  (i) Provisional attachment of bank account dated 28.05.2024 under Section 83 of CGST Act;
  (ii) Show Cause Notice (SCN) dated 20.06.2024 issued under Section 74.

• Grounds: No DRC-01A served in time; provisional attachment made without initiation of proper proceedings or Commissioner’s recorded opinion.

• Allegation: Petitioner availed ITC of ₹87,54,083/- from two non-existent suppliers – M/s Brighton Sales Inc. & M/s Caretech System.

• Investigation flagged fraudulent transactions, leading to attachment.

❓ Question(s) in Consideration

[Para 2, 4, 16, 17]:

1. Whether provisional attachment under Section 83 was valid in absence of due process and recorded reasons by the Commissioner?

2. Whether failure to provide DRC-01A before SCN invalidates the SCN proceedings?

3. Whether bank attachment should continue after passing of final order under Section 74?

🔍 Observations of Court

[Para 5, 6, 7, 8]:

• Provisional Attachment:

  • Court cited Radha Krishan Industries v. State of Himachal Pradesh holding attachment under Section 83 to be draconian; must be backed by tangible material and valid initiation of proceedings under Chapter XII, XIV, or XV.

  • Summons dated 20.05.2024 under Section 70 (Chapter XIV) preceded attachment, satisfying initial threshold [Para 5, 9].

  • Final SCN clearly disclosed allegations—wrongful availment of ITC from fake firms.

• SCN Challenge:

  • Court limited scrutiny to delay in DRC-01A issuance, as final order under Section 74 was already passed.

  • Liberty granted to petitioner to seek further reasons and raise objection under Rule 159(5).

🏛 Judgment of the Court

[Para 9, 10, 11]:

• Since final order under Section 74 has been passed and appeal remedy availed, provisional attachment has lapsed as per law and Supreme Court ruling.

• Bank attachment order dated 28.05.2024 stands automatically lifted.

• Department directed to communicate lifting of attachment to bank within one week.

• Petition accordingly disposed of.

🧾 Summary of Referred Cases

🧩 Between Fine Lines

1. Provisional attachment must follow strict preconditions – including proper initiation and recorded reasons.

2. Summons under Chapter XIV satisfies one such precondition.

3. Final adjudication under Section 74 nullifies the need for continued attachment.

4. Procedural defects (like delay in DRC-01A) are not fatal once final order is passed.

5. Department must act promptly to lift attachments post-adjudication.