SCN Delay in Rs.15.09 Cr GST Evasion Matter: Delhi HC Allows Bank Account Use with Rs. 1.5 Cr Balance Condition [Read Order]

The Delhi High Court has permitted the petitioner to operate a bank account, subject to maintaining a minimum balance of Rs. 1.5 crores, in the matter involving allegations of Rs. 15.09 crores GST evasion.

The petitioner challenged the continuation of provisional attachment over its bank account (bearing Account No. 201002965063 with IndusInd Bank, Vivek Vihar Branch) under Section 83 of the CGST Act, 2017, citing that no SCN had been issued even after significant time had elapsed since the search and seizure operation conducted in December 2023.

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The Directorate General of GST Intelligence (DGGI), which carried out the investigation, alleged that unaccounted stock was discovered and recorded an admission by the petitioner’s Director regarding clandestine removals.

The provisional attachment was ordered via Form GST DRC-22 dated 18 December 2023, and an Order-in-Original was passed on 28 March 2024 confirming the attachment.

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The petitioner argued that the attachment was based merely on eye-estimation without a conclusive assessment and emphasized that despite more than 16 months since the search and more than a year since the impugned order, no SCN had been issued.

The petitioner also highlighted substantial tax compliance, with more than Rs. 100 crores of GST and Rs. 4 crores of Income Tax paid in the last three years, and asserted that complete freezing of accounts was jeopardizing its business operations.

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The Revenue defended the attachment citing potential evasion but admitted that the SCN had not yet been issued, though maintaining that the Department had a three-year window to issue the same.

The bench comprising Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta observed the prolonged delay to issue SCN and ongoing business activities of the petitioner. The Court ruled that while securing the alleged dues was important, it was equally critical not to paralyze the petitioner’s business pending adjudication.

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The court observed the Chartered Accountant’s certificate placed on record, reflecting a significant net worth of the petitioner’s directors and shareholders. The Court held that securing 10% of the alleged tax demand would be sufficient at this stage.

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The Court directed that a minimum balance of Rs. 1.5 crores be maintained in the attached bank account, while allowing its operation for all other purposes. The Court restrained the creation of third-party interests in a specified immovable property till final adjudication.

The writ petition was disposed of with these directions, with all pending applications also closed.

To Read the full text of the Order CLICK HERE

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