Karnataka High Court Clarifies No Pre-Decisional Hearing Required Under Section 83 CGST Act for Provisional Attachment Orders

Background:
The petitioner, proprietor of M/s MK Traders, challenged a provisional attachment order dated 27.10.2025 issued by the Directorate General of GST Intelligence (DGGI) under Section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act), seeking defreezing of his bank accounts. The petitioner argued that the State GST authorities had already initiated proceedings on the same subject matter, and that the Central authorities were barred from parallel action under Section 6(2)(b) of the Act. He further contended that the attachment order was passed without affording him an opportunity of hearing, especially as he was in judicial custody at the relevant time.

Court’s Analysis:
The Court examined whether the proceedings by the Central authorities were barred under Section 6(2) of the Act. It found that the petitioner failed to produce any documentary evidence to substantiate the claim that the State authorities had formally initiated proceedings on the same subject matter. There was no material on record such as a show cause notice, details of adjudicatory proceedings, or particulars demonstrating the identity of the subject matter or tax period. The Court held that in the absence of such foundational material, the plea of statutory bar under Section 6(2) could not be entertained and was premature.

On the issue of natural justice, the Court referred to its own Division Bench decision in Principal Commissioner of Central Tax v. Narasimhan Engineering Contractors Pvt. Ltd. and the Supreme Court’s ruling in Radha Krishan Industries v. State of Himachal Pradesh. Both authorities clarified that Section 83 of the CGST Act does not require a pre-decisional hearing before passing a provisional attachment order. The statutory scheme instead provides a post-decisional remedy under Rule 159(5) of the CGST Rules, 2017, allowing the affected person to file objections and seek release of attached property. The Court emphasized that it cannot read into the statute a requirement which the legislature has consciously omitted.

The Court further noted that the power under Section 83 is drastic but is intended to protect the interests of revenue where there is prima facie material indicating evasion. In this case, the allegations involved fraudulent availment of input tax credit, use of fictitious entities, and circular trading, which are factual matters to be adjudicated in appropriate proceedings.

Decision:
The Karnataka High Court concluded that the petitioner’s plea of bar under Section 6(2) was unsupported and could not be examined at this stage. The Court also rejected the argument that the provisional attachment was vitiated for want of a pre-decisional hearing, holding that the statutory framework provides adequate post-attachment remedies. The writ petition was disposed of, with liberty to the petitioner to avail the remedy under Rule 159(5) of the CGST Rules. The Court clarified that the impugned provisional attachment would be subject to the outcome of a related writ petition (W.P. No. 38771/2025), which was reserved for orders. All contentions were left open.

Conclusion:
This decision reaffirms that under the CGST Act, provisional attachment orders under Section 83 do not require a pre-decisional hearing, and affected parties must seek redress through the statutory post-attachment mechanisms provided.