Delhi High Court Quashes Repeated Bank Attachments Under Section 83 of the CGST Act

The arbitrary freezing of bank accounts has been a significant pain point for businesses navigating the Goods and Services Tax framework. In a decisive move to protect the operational continuity of the assessee, the Delhi High Court recently delivered a landmark verdict in the matter of Gujral Sons Vs Union of India & Ors.. The judicial forum categorically struck down the revenue department's attempt to impose a secondary provisional attachment on the assessee's financial accounts, emphasizing that such draconian powers cannot be exercised repetitively without a fundamental change in circumstances.

This comprehensive analysis delves into the factual background, the statutory boundaries of provisional attachments, the binding precedents established by the Supreme Court, and the ultimate relief granted to the assessee by the High Court.

The Factual Matrix of the Dispute

The legal controversy originated from a sequence of administrative actions taken by the GST department against the assessee, which culminated in the restriction of their banking operations.

  1. Initial Freezing of Accounts: The tax authorities invoked their powers to issue an initial provisional attachment order on 13.12.2024.
  2. Statutory Expiration: In strict compliance with the legislative mandate embedded in Section 83(2) of the CGST Act, this preliminary restriction automatically ceased to exist upon the completion of 1 year. The initial order essentially met its statutory death.
  3. Conclusion of Assessment Phase: Subsequently, the department finalized the tax assessment proceedings, culminating in the issuance of an Order-in-Original dated 28.12.2025. Aggrieved by this assessment, the assessee initiated the process of filing a formal appeal.
  4. Subsequent Attachment Directives: Despite the assessment being concluded and the previous attachment having expired, the revenue authorities issued fresh attachment directives in Form GST DRC-22 on 03.02.2026, effectively freezing the assessee's bank accounts once again.