Supreme Court Clarifies: No Continuation of GST Bank Attachment After Final Section 74 Order

Background of the Dispute

The litigation arose from an order of provisional attachment of a bank account issued under Section 83 of the Central Goods and Services Tax Act, 2017 (“CGST Act”). The assessee challenged this attachment, as well as a related Show Cause Notice (SCN) under Section 74, leading to proceedings before both the Delhi High Court and later the Supreme Court of India.

The core legal questions involved:

  • When can provisional attachment under Section 83 be invoked?
  • Whether the attachment can survive once a final adjudication order is passed under Section 74.
  • How the principles laid down in Radha Krishan Industries v. State of Himachal Pradesh govern such attachment proceedings.

Proceedings Before the Delhi High Court

Challenge to Bank Account Freezing and SCN

The assessee initially invoked Article 226 jurisdiction of the Delhi High Court to contest:

  1. The provisional attachment order dated 28 May 2024, issued under Section 83 of the CGST Act, freezing its bank account.
  2. The Show Cause Notice under Section 74 of the CGST Act on various procedural and substantive grounds.

The key arguments before the High Court included:

  • At the time of passing the attachment order, no valid proceedings had commenced against the assessee under the relevant provisions of the CGST Act.
  • The Commissioner had not formed a proper opinion based on tangible material, as required by Section 83, before ordering provisional attachment.
  • The SCN under Section 74 was allegedly vitiated because:
    • Proper pre-notice intimation had not been given.
    • The procedure adopted was claimed to be contrary to statutory safeguards.

Statutory Framework Considered by the High Court

The High Court analysed the scope and conditions under Section 83 of the CGST Act, which permits provisional attachment:

  • Only after initiation of proceedings under specified chapters of the Act.
  • Subject to the Commissioner being satisfied, on the basis of material on record, that attachment is necessary to protect the interest of government revenue.

The Court also took note of:

  • The issuance of summons under Section 70 of the CGST Act prior to the attachment.
  • The judicial standards laid down by the Supreme Court in **Radha Krishan Industries v.