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Bank Account Freeze by GST Department – Know Your Rights & Remedies!
Introduction to Bank Account Freezing under GST
A bank account freeze by the GST Department is one of the most stressful situations for any business owner. Your money is safe, but you cannot use it which can halt operations overnight. However, the law provides clear rights and remedies to protect genuine taxpayers.
Before you panic, know this:
The GST Department cannot freeze your bank account without proper legal grounds. Let’s break everything down in simple, human-friendly language.
Bank Account Freeze by GST Department
A “provisional attachment” means that your bank account is temporarily frozen to protect government revenue.
You can deposit money, but you cannot withdraw or transfer funds.
What You Can & Cannot Do
Do:
- Deposit money
CANNOT DO:
- Withdraw
- Issue cheques
- Make online transfers
- Issue payments to vendors
Bank Freeze vs Bank Seizure
- Freeze = You still own the money, but cannot operate.
- Seizure = Government takes possession.
Under GST, only freeze happens — not seizure.
Legal Provisions Empowering GST Department
Section 83 of CGST Act, 2017
This section gives the Commissioner the power to provisionally attach property or bank accounts if needed to protect revenue.
Rule 159 of CGST Rules
This rule explains the procedure for issuing, serving, and challenging the attachment order.
When Can This Power Be Used?
Only during ongoing proceedings under these sections:
- Section 62 – Assessment of non-filers
- Section 63 – Assessment of unregistered persons
- Section 64 – Summary assessment
- Section 67 – Inspection, search, seizure
- Section 73 – Demand without fraud
- Section 74 – Demand with fraud
If none of these sections are active, the bank account freeze becomes illegal.
When Can the GST Department Freeze Your Bank Account?
A bank freeze usually happens when:
- There is suspected GST evasion
- Fake invoicing is detected
- You ignore GST notices
- Department needs to secure revenue during investigation
But remember this power is extraordinary, meant for exceptional cases only, not routine enforcement.
Validity of Bank Account Attachment
A provisional attachment is valid only for 1 year.
After one year:
- The order automatically becomes invalid
- The bank must release your account
- No fresh order can be issued for the same case unless new proceedings begin
If the bank refuses to release it, you can file a complaint or approach the court.
How to Check If Your Bank Account Has Been Attached
You can check the bank attachment order on the GST portal.
Steps:
- Login to GST portal
- Go to Dashboard
- Select Services
- Click on User Services
- Choose View / Download Certificates
- Open Form GST DRC-22
This form contains the actual attachment order issued to your bank.
Your Remedies to Unfreeze Your Bank Account
You are not helpless — the law provides multiple ways to get the bank freeze removed.
- File Objection in Form DRC-22A (Within 7 Days)
You can file a formal objection explaining:
- Why the freeze is unnecessary
- Why revenue is not at risk
- Any errors in the order
- Provide Alternative Security
You may offer:
- A bank guarantee
- A property security
- Indemnity bond
Provide Strong Supporting Evidence
Strong grounds can be:
- You have already responded to all notices
- You cooperated fully
- The freeze is disproportionate
- Your business is affected
Commissioner Can Release the Account
If the Commissioner is satisfied, the account can be unfrozen immediately.
Legal Recourse Beyond the GST Department
If your objections are ignored, you can approach the High Court.
Courts have repeatedly struck down unfair or excessive bank freezes.
Common Grounds Courts Consider:
- No legal proceedings were active
- Freeze caused unnecessary hardship
- Power was misused
- Revenue was not actually at risk
High Courts treat arbitrary bank freezes very seriously.
What to Do Immediately After Bank Freeze
Within the First 24–48 Hours:
- Download DRC-22
- Contact your tax consultant
- File an objection
- Gather proof of compliance
- Write to the bank seeking details
Do not delay the faster you respond, the quicker you can unfreeze the account.
Practical Tips to Prevent Future Bank Freezes
- Respond to all GST notices on time
- File returns regularly
- Avoid working with fake-invoice vendors
- Conduct monthly GST reconciliation
- Maintain clean documentation
- Keep communication open with the department
Good compliance reduces risk drastically.
Common Myths About GST Bank Freezes
Myth 1: “GST officer can freeze my account anytime.”
False only during specific proceedings.
Myth 2: “I cannot get my account unfrozen.”
You can through objections, security, or court.
Myth 3: “Freeze means my business is finished.”
Not at all it’s temporary and reversible.
Provisional Attachment Should Not Be Misused
Courts have clearly stated that provisional attachment is:
- A drastic measure
- Must be used sparingly
- Only to protect revenue
- Cannot be used as a tool of harassment
Good taxpayers are well protected under the law.
Conclusion
A bank account freeze by the GST Department can disrupt your business, but it doesn’t mean the end. The law clearly defines when and how the department can freeze your accountand more importantly, how you can get it unfrozen.
By understanding your rights, responding quickly, and using the legal remedies available, you can protect your business and ensure smooth operations.
FAQs
Yes, they can issue a freeze order without prior notice — but only during specific ongoing proceedings.
A maximum of 1 year, after which it becomes invalid.
File Form DRC-22A, provide evidence, offer security, or approach the High Court.
No if no proceedings under Sections 62, 63, 64, 67, 73, or 74 are active, it becomes illegal.
Yes, deposits are allowed; withdrawals are not.
