The Hon’ble Karnataka High Court in the case of The Principal Commissioner of Central Tax & Anr. v. Narasimhan Engineering Contractors Pvt. Ltd. & Anr. [Writ Appeal No. 1015 of 2025, order dated September 10, 2025] held that Section 83 of the CGST Act does not mandate a pre-decisional hearing before ordering provisional attachment of property, including bank accounts. However, provisional attachment is invalid if invoked without initiation of proceedings under Chapters XII, XIV, or XV of the Act.
Facts:
Narasimhan Engineering Contractors Pvt. Ltd. (“the Petitioner”) is a registered GST assessee engaged in construction and other taxable services. Based on investigation and perceived misuse of input tax credit, the Principal Commissioner of Central Tax, Bangalore East (“the Respondent”) provisionally attached the Petitioner’s bank account under Section 83 of the CGST Act, 2017 by order dated January 29, 2025. Summons under Section 70 of the Act had been issued, but the Petitioner contended there was no valid initiation of proceedings as required before such drastic action.
The Petitioner claimed that provisional attachment without a pre-decisional hearing violated natural justice.
The Respondent contended that Section 83 on its plain wording, does not require a pre-decisional hearing before provisional attachment. Instead, the relevant safeguard is a right to post-attachment objection under Rule 159(5) of the CGST Rules, 2017.
The Petitioner approached the High Court by way of writ petition, challenging the attachment under Article 226.
Issue:
Whether Section 83 of the CGST Act mandates a pre-decisional hearing before passing an order of provisional attachment, and whether the attachment is valid if no proceedings under Chapters XII, XIV, or XV have been initiated?
Held:
The Hon’ble Karnataka High Court in Writ Appeal No. 1015 of 2025 held as under:
- Observed that, Section 83 does not mandate a pre-decisional hearing for provisional attachment; reading in such a requirement is impermissible in interpreting fiscal statutes.
- Noted that, the affected party has a statutory right to file objections and seek a hearing before the Commissioner under Rule 159(5) after attachment.
- Held that, for exercise of Section 83, initiation of proceedings under Chapters XII (Assessment), XIV (Inspection, Search, Seizure and Arrest), or XV (Demands and Recovery) is essential.
- Further noted that, mere issuance of summons under Section 70 does not amount to initiation of proceedings.
- Held that, in this case, there was no material to show valid initiation of proceedings; thus, the attachment was unsustainable. Therefore, allowed the writ appeal in part, setting aside the finding on necessity of pre-decisional hearing, but quashed the provisional attachment itself for non-compliance with prerequisites of Section 83.
Our Comments:
This decision aligns with Supreme Court precedent in Radha Krishan Industries v. State of Himachal Pradesh [(2021) 48 GSTL 113 (SC)], which clarified that Section 83 is a “draconian” power requiring strict adherence to statutory safeguards, and thus attachment must be founded on actual commencement of proceedings under demarcated GST chapters and a reasoned opinion by the Commissioner, supported by tangible material. The Hon’ble Supreme Court finding, Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate [(2025) 33 Centax 222] that mere issuance of a summons is not equivalent to initiation of proceedings under Section 83, aligns with the national judicial approach and serves as a check on arbitrary use of attachment powers.
Relevant Provisions:
Section 83 of the CGST Act, 2017:
“83. Provisional attachment to protect revenue in certain cases.—
(1) Where during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, 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.
(2) Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1).”
Rule 159(5) of the CGST Rules, 2017:
“159. Provisional attachment of property –
(5) Any person whose property is attached may file an objection in FORM GST DRC-22A to the effect that the property attached was or is Not liable to attachment, and the Commissioner may, after affording an opportunity of being heard to the person filing the objection, release the said property by an order in FORM GST DRC- 23.”
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