No Power to Renew Lapsed Provisional Attachment Under GST Law: Supreme Court Declares Fresh Attachment Without Statutory Backing as Null and Void

“If law says attachment lapses in one year, it cannot be renewed under any garb… To permit such action would make Section 83(2) otiose”— In a landmark decision that directly impacts the scope of revenue authority under the GST regime, the Supreme Court of India ruled that a fresh provisional attachment order cannot be issued once the original order lapses by law after one year, unless specifically provided for by statute.

Justice Dipankar Datta and Justice Augustine George Masih allowed the appeal against the Gujarat High Court’s ruling and declared that the Central Goods and Services Tax Act, 2017 (CGST Act) does not empower the revenue to re-attach a bank account once a previous attachment order has expired under Section 83(2) of the Act.

“There is No Statutory Power to Renew a Lapsed Attachment”: Court Strictly Interprets Section 83

The Supreme Court dealt with a significant question: “Whether the CGST Act permits issuance of a second provisional attachment order under Section 83(1) after the initial order ceases by operation of law after one year, under Section 83(2)?”

Answering in the negative, the Court held:

“Section 83(2) of the CGST Act leaves no doubt that any order of provisional attachment issued under sub-section (1), would cease to have any effect after a period of one year… There is no provision for renewal, and any such exercise is a nullity in law.” [Para 19, 29]

Multiple Attachments Without Jurisdiction

The appellant, Kesari Nandan Mobile, had approached the Gujarat High Court against two fresh provisional attachment orders dated 13 November 2024 and 18 December 2024, arguing they were unlawfully issued after the first attachment orders (dated October 2023) had expired automatically in terms of Section 83(2).

Despite the expiration, the Assistant Commissioner of State Tax (Enforcement Division – 5) termed the new orders as a “renewal”, which the Gujarat High Court upheld. The High Court held that “law does not place any embargo” on issuing fresh attachment after expiry.

Supreme Court Reverses Gujarat High Court: “Such Renewal is a Legal Impossibility”

The Supreme Court categorically rejected the Gujarat High Court’s view:

“Conceding power to issue a fresh provisional order of attachment after the initial order has lapsed… would render Section 83(2) otiose. We see no reason to read Section 83 in a manner to confer any additional power…” [Para 30]

The Court relied on the doctrine of “ut res magis valeat quam pereat”—a statute should be interpreted so as to give it meaning, not render it redundant.

On Revenue’s Argument of “No Express Bar in the Statute”

“A statutory authority can only act within the bounds of its power… If power is not conferred by statute, it cannot be justified by arguing that there is no prohibition.” [Para 28]

“Repeated issuance of attachment orders under the garb of ‘renewal’ would lead to a serious anomaly and amount to filling old wine in a new bottle.” [Para 31]

“GST Department Cannot Act Like Recovery Agency Before Assessment”: Court Clarifies Scope

The Court observed that provisional attachment is meant as a pre-emptive measure, not a recovery tool:

“Provisional attachment is not a recovery mechanism… Once investigation culminates in a demand, revenue must follow the recovery process provided in law.” [Para 32]

“Short-circuiting procedure by pursuing provisional attachment as a means to recover tax due would frustrate legislative intent.”

Court Cites Previous Judgments, Aligns with Kerala High Court’s View

The Court endorsed the decision of the Kerala High Court in Ali K. v. Additional Director General (2025 SCC OnLine Ker 758), which had earlier rejected the Gujarat view.

“We approve the view taken in Ali K., which held that absence of any enabling provision in Section 83(2) precludes issuance of fresh attachments on the same property after lapse.” [Para 34]

The Court also referred to its own prior observations in Radha Krishan Industries v. State of Himachal Pradesh [(2021) 6 SCC 771], stating:

“The power to levy provisional attachment is draconian… The formation of opinion by the Commissioner must bear a proximate and live nexus to the protection of government revenue.” [Para 17]

GST Council Itself Recognised the Problem

The Court noted that the GST Council, in its 53rd Meeting, acknowledged this conflict and recommended aligning Rule 159 of the CGST Rules with Section 83(2), as courts had already pointed out the inconsistency.

“The Council… has recommended amendment in sub-rule (2) of Rule 159 and FORM GST DRC-22… to clearly provide that such order shall cease to have effect after one year.” [Para 38]

“The respondent could not have issued the impugned provisional attachment orders dated 13th November 2024 and 18th December 2024 after the previous ones ceased to have effect by law.” [Para 41]

Accordingly, the Court ordered the bank accounts to be de-freezed forthwith.

This judgment is a resounding affirmation of taxpayer rights under GST law, and a strong warning against administrative overreach by revenue authorities. By ruling that fresh or “renewed” attachments are legally unsustainable once the statutory time limit lapses, the Court has reinforced the rule of law, the sanctity of procedural safeguards, and legislative supremacy.

Date of Decision: 14 August 2025