In a significant case, the Delhi High Court (HC) has held that attachment of bank accounts is a draconian step and the attachment must be subject to condition under section 83 of the Goods and Service Tax Act(GST), 2017.
Sakshi Bahl & Anr., the petitioners challenged the impugning order dated 06.02.2023 (‘impugned order’), whereby the respondent (Principal Additional Director General, DGGI, DZU), had ordered provisional attachment of the savings bank accounts of the petitioners.
In addition, the respondent had also directed the Bank Branch Manager, HDFC Bank, not to permit any withdrawal from the bank accounts of the petitioners which were operated under the same PAN numbers, without the permission of the Department.
The petitioner contended that they are neither taxable persons nor persons covered under Section 122(1A) of the Central Goods and Services Tax Act, 2017 (‘the Act’); therefore, the impugned order is ex-facie without jurisdiction.
It was submitted that the respondent had attached the petitioners’ bank account in view of the statement made by one, Shri Rajiv Chawla during the investigation relating to fake firms involved in passing off fake Input Tax Credits.
Shri Rajiv Chawla and Shrimati Shipra Chawla are stated to be partners in a firm named M/s Hindustan Paper Machinery Industry and are alleged to be the main beneficiaries of the invoices raised by M/s Shankar/ Shankar Trading Company.
Section 83 of the Act empowers the Commissioner to provisionally attach the assets of a taxable person, as per clause (1) of the above-said provision Where, after initiation of any proceedings under Chapter XII, Chapter XIV or Chapter XV, the Commissioner believes that to protect 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 or any person specified in sub-section (1A) of section 122, in such manner as may be prescribed.
It was stated by the petitioner that the funds received by them were the return of advances and loans that were extended.
The Coram comprising of Justice Vibhu Bakhru and Justice Amit Mahajan observed that it was not open for the respondent to attach the bank accounts of other persons on a mere assumption that the funds therein are owned by any taxable person.
“The attachment of bank accounts is a draconian step and such action can only be taken in case conditions specified in Section 83 of the Act, are fully satisfied. The exercise of power under Section 83 of the Act must necessarily be confined within the limits of the aforesaid provision.” the Court held.
The Court allowed the petition and set aside the order dated 06.02.2023 which attached the bank accounts of the petitioners.
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