In W.P.(C) 3986/2023- DEL HC - Attachment of bank accounts is a draconian step and requires compliance with Section 83 of the Central Goods and Services Tax Act, says Delhi High Court
Justice Vibhu Bakhru & Justice Amit Mahajan [29-03-2023]

Read Order: Sakshi Bahl & Anr V. The Principal Additional Director General

Chahat Varma

New Delhi, May 26, 2023: The Delhi High Court division bench comprising of Justice Vibhu Bakhru and Justice Amit Mahajan has ruled that the attachment of bank accounts is a draconian step and that can only be taken if the conditions specified in section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act), are fully met. The court emphasized that the exercise of power under section 83 must necessarily be confined within the limits of the aforesaid provision.

The petitioners in the case had challenged an order issued by the Principal Additional Director General, DGGI, DZU, which directed the provisional attachment of their savings bank accounts. The respondent had taken this action based on a statement made by Rajiv Chawla during an investigation into fake firms involved in fraudulent claims of Input Tax Credit. The respondent believed that the funds in the petitioners' bank accounts belonged to the partners of M/s Hindustan Paper Machinery Industry and, therefore, proceeded to attach their accounts.

The court held that the power under section 83 of the Act, to provisionally attach assets or bank accounts, was restricted to attaching the bank accounts and assets of taxable persons and persons specified under section 122(1A) of the Act, however, in this case, the court determined that the petitioners were not taxable persons or persons falling under section 122(1A) of the Act.

The court said that it was not open for the respondent to attach the bank accounts of other persons on a mere assumption that the funds therein were owned by any taxable person. Consequently, court concluded that the impugned order of attaching the bank accounts of the petitioners cannot be upheld.