More Than What Meets the Eye”: Delhi HC Dismisses Writ for De-Freezing Bank Account, cites Concealment of DGGI Probe & GST ITC Fraud [Read Order]

The Delhi High Court recently refused to grant relief to a petitioner who sought de-freezing of his IndusInd Bank account after finding that he had concealed details of an ongoing investigation by the Directorate General of GST Intelligence (DGGI) into fraudulent Input Tax Credit (ITC) concerning nearly ₹19.39 crore in which the petitioner was allegedly involved.

The petitioner, Aashish lodged the present writ claiming that his account maintained with IndusInd Bank, Rajouri Garden Branch, had been frozen without notice or communication from DGGI Gurugram Zonal Unit. Represented by Udit Bakshi, Bhwesh Bhola and Piyush Kumar, the petitioner contended that more than a year had elapsed since the freezing and under Section 83 of the Central Goods andServices Tax Act, 2017, any provisional attachment ceases after one year unless renewed.

“Section 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."

The High Court had during an earlier hearing directed the standing counsel to obtain instructions. Accordingly, Anurag Ojha, Dipak Raj and Ayushman appearing for the DGGI, produced departmental records revealing that the petitioner, functioning under the name ‘M/s Steelmart India’ had availed ITC “running into crores of rupees” during FY 2024-25 and was under investigation under Sections 67 and 74 of the Central Goods and Services Tax (CGST) Act, 2017 Act.

Counsel for IndusInd Bank, Rashmi placed on record the freezing order dated 1 October 2024 which recorded that the entity appeared involved in GST evasion of ₹19.39 crore (₹1939.66 lakh), leading to the restriction that “debit over and above ₹1939.66 lakh shall only be allowed” from the said account.

A physical inspection by the DGGI officers further revealed that the premises at Masoodabad, Najafgarh, Delhi, which, the petitioner had claimed was where Steelmart India was supposedly registered at, was non-existent. Investigating Officer Rajeev Tomar informed the Court that repeated attempts to locate the premises and contact the petitioner failed, confirming that Steelmart India was not operational at the declared address.

A Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain observed that there was “more than what meets the eye” in the matter, noting deliberate concealment of the material facts in the investigation, the quantum of ITC fraud and the inspection findings despite the petitioner having complete knowledge of the same.

Accordingly, the Court dismissed the petitioner from invoking the writ jurisdiction under Article 226 and advised him to file objections under Rule 159(5) of the CGST Rules if aggrieved by the attachment.

Further, the Court imposed costs of ₹1 lakh on the petitioner, payable to the Delhi High Court Staff Welfare Fund within two weeks, and permitted the DGGI and GST department to proceed against the petitioner in accordance with law.

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