Bhattad Industries (P.) Ltd. VS Union of India

Two petitions under Article 226 of the Constitution of India were brought forth, challenging the actions of the Assistant Commissioner of Central Goods and Service Tax under the Goods and Service Tax Act, 2017 (referred to as “the Act”). The petitioner, requesting final disposal at the admission stage, sought redress for the freezing of their accounts by their bankers, namely Indusind Bank, Miraroad Branch, and Axis Bank, Tardeo Branch, at the direction of the aforementioned Assistant Commissioner.

The petitions under Article 226 of the Constitution of India were brought forth to contest the actions of the Assistant Commissioner of Central Goods and Service Tax (CGST) under the Goods and Service Tax Act, 2017 (the Act). Specifically, the petitions challenge the directive issued by the Assistant Commissioner to freeze the bank accounts of the petitioner held with Indusind Bank, Miraroad Branch, and Axis Bank, Tardeo Branch.

The petitioner contends that the freezing of their bank accounts was arbitrary and unjustified due to the absence of any prior show cause notice regarding alleged violations of the Act. It is argued that this action is in violation of Section 83 of the Act, which mandates that the provisional attachment of bank accounts to safeguard revenue can only be carried out through a written order by the Commissioner. In this instance, no such order was issued, thus rendering the freezing of the petitioner’s bank accounts as lacking legal basis.

The petitioner asserts that the freezing of their accounts not only lacks jurisdiction but also disregards procedural safeguards outlined in the Act. They highlight the necessity for due process and adherence to statutory provisions before such drastic measures are taken against them.

In essence, the crux of the dispute revolves around the legality and procedural correctness of freezing the petitioner’s bank accounts without prior notice or authorization as mandated by the relevant provisions of the Goods and Service Tax Act, 2017.

The summary outlines two petitions filed under Article 226 of the Indian Constitution, challenging the actions of the Assistant Commissioner of Central Goods and Service Tax (CGST) under the Goods and Service Tax Act, 2017 (the Act). The Assistant Commissioner directed the Petitioner’s bankers, Indusind Bank and Axis Bank, to freeze the Petitioner’s accounts without issuing any show cause notice regarding any alleged violation of the Act. The Petitioner argues that this freezing of accounts is arbitrary and contrary to Section 83 of the Act, which requires provisional attachment of bank accounts to protect revenue only upon a written order by the Commissioner. No such order was passed in this case, rendering the freezing of the accounts jurisdictionally unsound. The summary emphasizes the importance of due process and the necessity for a senior officer to apply their judgment before ordering such drastic measures as the attachment of a bank account, as stipulated by the Parliament to safeguard against arbitrary actions.

The court addressed two petitions brought under Article 226 of the Indian Constitution, challenging the actions of the Assistant Commissioner of Central Goods And Service Tax (GST) under the Goods & Service Tax Act, 2017. These actions involved directing the petitioner’s banks, namely Indusind Bank, Miraroad Branch, and Axis Bank, Tardeo Branch, to freeze the petitioner’s accounts with them. The petitioner argued that the freezing of their accounts was arbitrary and lacked proper legal basis, as no show cause notice regarding any alleged violation of the Act had been issued. Additionally, they contended that the freezing of the accounts contravened Section 83 of the Act, which mandates that the provisional attachment of bank accounts to protect revenue can only be done through a written order by the Commissioner, which was not the case here.

The court deliberated on the significant power conferred by Section 83 and noted that it was designed to ensure a thoughtful and justified decision by a senior officer before attaching a bank account. However, it found that in this instance, no such order from the Commissioner was available, indicating a lack of proper consideration before freezing the petitioner’s accounts.

Mr. Jetly, representing the respondent, acknowledged the absence of such an order, further affirming the petitioner’s argument. This highlighted the absence of due diligence in the freezing of the petitioner’s bank accounts.

In essence, the court recognized the gravity of the power to freeze bank accounts under the GST Act and emphasized the importance of adhering to the procedural safeguards outlined in the legislation. Consequently, it deemed the action of freezing the petitioner’s accounts without proper authorization as unjustified and without jurisdiction.

The case involves two petitions filed under Article 226 of the Indian Constitution, challenging the actions of the Assistant Commissioner of Central Goods And Service Tax under the Goods & Service Tax Act, 2017 (the Act). The petitioner alleges that the freezing of their bank accounts by the Assistant Commissioner, without issuing any show cause notice or obtaining an order from the Commissioner as required by Section 83 of the Act, is arbitrary and unlawful. The court acknowledges that the power to provisionally attach bank accounts is a drastic measure and can only be exercised by the Commissioner after due consideration of the facts. However, it is revealed that no such order was passed in this case, indicating a lack of proper application of mind by the authorities. Consequently, the court rules that the freezing of the petitioner’s bank accounts is without legal authority and orders the immediate vacation of the attachment. Both petitions are allowed in favor of the petitioner.

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