Facts of the Case

The petitioner filed a writ petition under Article 226 of the Constitution challenging the freezing of his bank account maintained with IndusInd Bank, Rajouri Garden Branch, pursuant to instructions issued by the Directorate General of GST Intelligence. The petitioner claimed that no order or notice was served upon him and that the account had remained frozen for more than one year without any communication from the authorities. The petitioner stated that he became aware of the freezing of the account only on 1st October, 2024 through the bank.

During the proceedings, the Department produced the provisional attachment order dated 1st October, 2024 issued under Section 83 of the CGST Act, indicating that proceedings had been initiated under Sections 67 and 74 of the Act against M/s Steelmart India, a proprietary concern of the petitioner. The order recorded alleged GST evasion of approximately ₹1,939.66 lakhs and permitted debit only up to the said amount.

Issues Involved

Whether the provisional attachment of the bank account under Section 83 of the CGST Act was illegal for want of notice, whether continuation of attachment beyond one year was impermissible, and whether the writ petition was maintainable in view of concealment of material facts and availability of statutory remedy under Rule 159(5) of the CGST Rules.

Petitioner’s Arguments

The petitioner contended that the bank account was frozen without issuance of any order or notice and that the attachment had continued beyond the permissible period of one year under Section 83 of the CGST Act. It was argued that such action was arbitrary and violative of principles of natural justice.

Respondent’s Arguments

The Revenue submitted that the petitioner was involved in large-scale fraudulent availment of input tax credit running into crores of rupees and that investigation had already been initiated by the DGGI. It was submitted that summons had been issued under Section 70 of the CGST Act and the petitioner’s statement had been recorded. The Department also relied upon the physical inspection report, which revealed that the registered place of business of the petitioner was non-existent. It was contended that the writ petition deliberately concealed these material facts and that the petitioner had an efficacious statutory remedy under Rule 159(5) of the CGST Rules.

Court Order / Findings

The Delhi High Court observed that the writ petition was bereft of material facts relating to the ongoing investigation, the quantum of ITC allegedly fraudulently availed, and the provisional attachment order dated 1st October, 2024. The Court noted that the inspection report clearly showed that the petitioner’s premises were non-existent and that the petitioner failed to cooperate during physical verification.

The Court held that there was clear concealment of material facts by the petitioner and that the provisional attachment was backed by statutory proceedings under Sections 67 and 74 of the CGST Act. It was further held that objections to provisional attachment could be raised before the Department under Rule 159(5) of the CGST Rules and that the writ petition was not maintainable in the facts of the case.

Important Clarification

The High Court clarified that provisional attachment under Section 83 of the CGST Act is subject to statutory safeguards and that the proper remedy against such attachment is by filing objections under Rule 159(5) of the CGST Rules. The Court further clarified that writ jurisdiction cannot be invoked by suppressing material facts or bypassing available statutory remedies.

Final Outcome

The writ petition was dismissed with costs of ₹1,00,000 payable to the Delhi High Court Staff Welfare Fund. The Court granted liberty to the petitioner to file objections under Rule 159(5) of the CGST Rules, if so advised, and permitted the DGGI and GST authorities to proceed further in accordance with law.

SOURCE LINK: https://delhihighcourt.nic.in/app/showFileJudgment/75419112025CW166802025_172103.pdf

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