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Kesari Nandan Mobile v. Office of Assistant Commissioner of State Tax (2), Enforcement Division-5

Civil Appeal · 2025 INSC 983Decided 14 Aug 2025
C.A. No.-009543-009543 - 2025
Justice Dipankar Datta · Justice Augustine George Masih

Background

The GST authorities provisionally attached the appellant company's bank accounts in October 2023 under Section 83 of the CGST Act, which by law lapses automatically after one year. Instead of letting the attachment lapse, the department issued fresh "renewal" attachment orders in November and December 2024, on essentially the same grounds as before, without ever deciding the company's pending objection to the original attachment. The Gujarat High Court dismissed the company's challenge, holding that the CGST Act did not expressly forbid a second attachment order after the first lapsed. The company appealed to the Supreme Court, arguing that unlike the Customs Act and Excise Act (which expressly allow extensions of provisional attachment up to two years), the CGST Act contains no such extension provision, so a "renewal" after the statutory one-year period is unlawful.

Decision Breakdown

The Supreme Court held that Section 83 confers a "draconian" power that must be strictly construed, and reaffirmed the position from Radha Krishan Industries v. State of Himachal Pradesh that its exercise requires punctilious compliance with statutory preconditions. Since Section 83(2) plainly states a provisional attachment "shall cease to have effect" after one year, and Parliament, unlike in the Customs Act and Excise Act, deliberately did not provide any renewal or extension mechanism, allowing the tax authority to issue repeated "renewal" orders on the same grounds would render the one-year cap meaningless (invoking the principle that a statute must be read so its provisions are not reduced to a dead letter, and that what cannot be done directly cannot be done indirectly). A government authority has only the powers a statute actually confers, and absent express statutory or executive authorization for renewal, none exists here. The Court quashed the November and December 2024 attachment orders and directed the appellant's bank accounts to be de-frozen immediately, while clarifying that the department's ongoing investigation could still continue through other lawful means (e.g., final recovery proceedings once assessment concludes).

Lesson Learnt

A provisional attachment of a taxpayer's bank account under GST law automatically expires after one year and cannot be indefinitely "renewed" on the same grounds: tax authorities must either finalize their assessment and pursue formal recovery within that time, or let the attachment lapse; taxpayers facing such an expired-but-still-frozen account have a valid basis to seek its release in court.

Official source (sci.gov.in)View Judgment (PDF)

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