Observing that attachment of Bank Accounts is a draconian step, the Delhi High Court has ruled that such action can only be taken in case conditions specified in Section 83 of the Central Goods and Services Tax Act, 2017, are fully satisfied.
The Division Bench of Justice Vibhu Bakhru and Justice Amit Mahajan asserted that it is not open for the Tax Department to attach the bank accounts of other persons on a mere assumption that the funds therein are owned by any taxable person and that exercise of power under Section 83 of the Act must necessarily be confined within the limits of Section 122(1A) of the Central Goods and Services Tax Act, 2017 Act.
Brief Facts of the Case
The Principal Additional Director General, DGGI, DZU had directed the attachment of savings bank accounts of the petitioners. Additionally, it 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
It was the petitioner's case that they are neither taxable persons nor persons covered under Section 122(1A) of the Central Goods and Services Tax Act, 2017 and therefore, the impugned order is ex-facie without jurisdiction.
It was the Director's submission that petitioners’ bank account had been attached in view of the statement made by one man during the course of the investigation relating to fake firms involved in passing off fake Input Tax Credit. It was further submitted that he and his wife were partners in M/s Shankar/Shankar Trading Company and were authorized to operate the bank account. However, he used to sign his chequebooks in blank and hand over the same to two other people and would receive a minor commission for the same.
The respondent was of the view, following a few events of things that the funds lying in the account of the petitioners belonged to the partners of M/s Hindustan Paper Machinery Industry and, therefore, had proceeded to attach their bank accounts.
High Court's Observation
in the present case, the petitioners are not taxable persons or persons as specified in Section 122(1A) of the Act. It noted that it will not examine the nature of the payment made by Shri Rajiv Chawla to the petitioners same cannot be a subject matter of adjudication in these proceedings.
Noting that power under Section 83 of the Act, to provisionally attach assets or bank accounts is limited to attaching the bank accounts and assets of taxable persons and persons specified under Section 122(1A) of the Act, the court opine that the impugned order cannot be sustained.
CASE TITLE: SAKSHI BAHL & ANR.vs THE PRINCIPAL ADDITIONAL DIRECTOR GENERAL
CASE DETAILS: W.P.(C) 3986/2023
CORAM: Justice Vibhu Bakhru and Justice Amit Mahajan
Advocates for Petitioner: Mr. Aditya Kumar, Mr. Jitin Singhal, Mr. Himanshu Tyagi and Mr. Mohit Yadav,
Advocates for Respondent: Mr. Harpreet Singh, Senior Standing Counsel, with Ms. Suhani Mathur and Mr. Jatin Kumar Gaur
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