Provisional Attachment Of Bank Accounts Adversely Impact Assessee’s Business: Delhi High Court Imposes Rs. 5k Cost On Superintendent Anti-Evasion

The Delhi High Court has imposed a cost of Rs. 5,000 on the department and observed that the provisional attachment of bank accounts adversely impacts the assessee’s business.

The bench of Justice Vibhu Bakhru and Justice Amit Mahajan has observed that the communication seeking to place a debit freeze on the petitioner’s account emanated from Superintendent Anti-Evasion and not from the Commissioner exercising jurisdiction in respect of the taxpayer. The communication also does not indicate that it was issued with the authority of the Commissioner.

The petitioner/assessee challenged a communication issued by the Superintendent (Anti-evasion) to the SBI’s Branch Manager calling upon the bank to furnish certain documents pertaining to the petitioner. The communication further directed the bank not to permit any debit from the petitioner’s bank account maintained with the bank without the prior permission of the Department.

The department failed to point out any provision under the CGST Act permitting the Superintendent (Anti-evasion) to issue a communication directing the Bank to freeze the bank account. He has referred to the provision of Section 83 of the CGST Act, which empowers the Commissioner to issue an order for the provisional attachment of assets, including bank accounts. However, an order of provisional attachment of assets under Section 83 of the CGST Act can be issued only if the Commissioner is of the view that it is necessary to protect the interests of the Revenue. However, in the present case, the Commissioner has not issued any order.

The assessee contended that the order in Form DRC-22 has not been issued. The communication has emanated from the Superintendent (Anti-Evasion) and not from the Commissioner exercising jurisdiction in respect of the taxpayer. The communication also does not indicate that it was issued with the authority of the Commissioner.

The court held that no order under Section 83 of the CGST Act can be passed by any officer other than the Commissioner, and this can be done only if he is satisfied that it is necessary to pass an order to protect the interests of Revenue.

The court found that the Superintendent (Anti-evasion) has, by a letter addressed to the bank seeking information, also directed the freezing the petitioner’s bank account. Communication is without authority under the law. It has been issued in complete disregard of the provisions of the CGST Act and the adverse effects of the orders.

“We also consider it apposite to impose a cost of ₹5,000/- on the respondents. The said cost will be recovered from the Superintendent (Anti-evasion),” the court said.

Case Title: M/S Vikas Enterprises Versus Commissioner Of Central Tax (GST)

Citation: 2023 LiveLaw (Del) 708

Date: 31.07.2023

Counsel For Petitioner: Vibhooti Malhotra

Counsel For Respondent: Anurag Ojha

Click Here To Read The Order