Top Stories Legality of Provisional Bank Attachments Under GST: How to Draft Reply Notice Any provisional attachment made without an ongoing proceeding under Sections 62, 63, 64, 67, 73, or 74 of the CGST Act is illegal By Eeva Mary Sanil – On February 20, 2025 10:33 am – 3 mins read The Goods and Service Tax ( GST ) was introduced in India for multiple assessment provisions. Tax collection and enforcement mechanisms. The provisional attachment of bank accounts under Section 83 of the CGST Act 2017 is one of the most contentious parts of GST enforcement. This article attempts to look into the legal framework governing bank attachments, the procedural requirements, and judicial pronouncements that have shaped the interpretation of this provision.

Legal Framework of Provisional Bank Attachments Provisional attachment is a mechanism that allows tax authorities to secure government revenue in cases where proceedings are ongoing under specified sections of the GST Act. Section 83(1) of the CGST Act provides that: Join the Tax & Finance Experts Using This Ultimate Capital Gains Guide – Click here “Where during the pendency of any proceedings under section 62 or section 63, section 64, section 67 or section 73 or section 74, the Commissioner thinks that to protect the interest of the Government revenue, it is necessary to do so, he may, by order in writing attach provisionally any property, including bank account, belonging to the taxable person in such manner as may be prescribed.” For a provisional attachment order to be legally valid, two key conditions must be met: 1. There must be ongoing proceedings under Sections 62, 63, 64, 67, 73, or 74 of the GST Act. 2. The Commissioner must believe such an attachment is necessary to protect the government’s revenue. The procedural requirements for such an attachment are further elaborated under Rule 159 of the CGST Rules, 2017.

This rule reads thus:- Join the Tax & Finance Experts Using This Ultimate Capital Gains Guide – Click here  (1) Where the Commissioner decides to attach any property, including a bank account, by the provisions of section 83, he shall pass an order in FORM GST DRC-22 to that effect, mentioning therein the details of the attached property. This rule mandates that the Commissioner issue an attachment order in Form GST DRC-22, and any affected taxpayer can file an objection within seven days of the attachment per Rule 159(5) which reads as: “(5) Any person whose property is attached may, within seven days of the attachment under sub-rule

(1), file an objection that the attached property was or is not liable to attachment. After being heard by the person filing the objection, the Commissioner may release the said property by an order in FORM GST DRC- 23. Join the Tax & Finance Experts Using This Ultimate Capital Gains Guide – Click here (6) The Commissioner may, upon being satisfied that the property was, or is no longer liable for attachment, release such property by issuing an order in FORM GST DRC- 23.”  If the objection is justified, the Commissioner can release the attachment through Form GST DRC-23. Courts throughout India have repeatedly ruled that provisional attachment should not be abused as a means of harassment despite the legislative provision. In the case of Kushal Ltd. vs. Union of India(2019), the Gujarat High Court ruled that no bank attachment can be made unless proceedings under Sections 62, 63, 64, 67, 73, or 74 are pending. In this case, the taxpayer’s bank account was provisionally attached without such pending proceedings, leading the court to quash the order.

Join the Tax & Finance Experts Using This Ultimate Capital Gains Guide – Click here The Bombay High Court, in the case of Praful Nanji Satra (2021 TAXSCAN (HC) 687), set aside a provisional attachment order where the Revenue Department had attached the taxpayer’s bank account following a search conducted at the premises of a related entity. The court ruled that Provisional attachment under Section 83 cannot extend to an entity unless pending proceedings exist against it. Steps to Draft a Reply Notice for Provisional Bank Attachment Under GST 1. Acknowledge the Notice and mention the reference number and date of the notice. Confirm receipt and state the purpose of the reply.

2. Challenge the Legality of the Attachment to verify if proceedings under Sections 62, 63, 64, 67, 73, or 74 are pending. If no such proceedings exist, state that the attachment is illegal. Join the Tax & Finance Experts Using This Ultimate Capital Gains Guide – Click here 3. Reference Relevant Legal Provisions, cite Section 83 of the CGST Act and Rule 159 of the CGST Rules. Mention the requirement for the Commissioner’s satisfaction regarding the need for attachment. 4. Refer to Judicial Precedents. Cite relevant High Court or Supreme Court rulings that proves that bank attachments without pending proceedings are illegal. 5. Request for Removal of Attachment. Formally request the release of the bank account.

Mention Rule 159(5) & (6), which allows filing an objection and ordering a release via Form GST DRC-23. 6. Provide Supporting Documents. Attach any relevant case law excerpts, prior communications, or financial records supporting the claim. The extraordinary power of provisional attachment under Section 83 must be used carefully and only in situations authorised by law. In addition to being unfair, arbitrary bank attachments are illegal, mainly when no ongoing legal processes exist