Attachment Of Bank Accounts Is A Draconian Step, Such Action Can Only Be Taken Subject To Section 83 Of CGST Act: Delhi HC
The Delhi High Court has observed that the action of attaching bank accounts is a draconian step. The Court added 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 attachment of bank accounts is a draconian step and such action can only be taken in case conditions specified in Section 83 of the Act, are fully satisfied. The exercise of power under Section 83 of the Act must necessarily be confined within the limits of the aforesaid provision.”, Justice Vibhu Bakhru and Justice Amit Mahajan held.
Section 83 of the Act empowers the Commissioner to provisionally attach the assets of a taxable person.
In this case, the petitioners had filed a petition, inter alia, impugning an order of provisional attachment of savings bank accounts of the petitioners.
It was the petitioners’ case that they are neither taxable persons nor persons covered under Section 122(1A) of the Central Goods and Services Tax Act, 2017 (hereinafter ‘the Act’); therefore, the impugned order is ex facie without jurisdiction.
The Court was informed that the respondent had attached the petitioners’ bank account in view of the statement made during the course of investigation relating to fake firms involved in passing off fake Input Tax Credit.
Advocate Aditya Kumar appeared for the petitioners whereas Harpreet Singh, Senior Standing Counsel, appeared for the Respondent.
The Court noted that the petitioners are not taxable persons and that the 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.
“It is not open for the respondent to attach the bank accounts of other persons on a mere assumption that the funds therein are owned by any taxable person.”, the Court held.
Thus the Court allowed the petition and set aside the Order attaching the bank accounts of the petitioners.
Cause Title- Sakshi Bahl & Anr v. The Principal Additional Director General (Neutral Citation Number is 2023:DHC:2312-DB)