HC Bars Dept. from Seizing Creditors’ Accounts Based on Assumptions

Case details: Sakshi Bahl v. Principal Additional Director General - [2023] 150 taxmann.com 47 (Delhi)

Judiciary and Counsel Details

• Vibhu Bakhru and Amit Mahajan, JJ.
• Aditya Kumar, Jitin Singhal, Himanshu Tyagi and Mohit Yadav, Advocates for the Appellant.
• Harpreet Singh, Senior Standing Counsel, Ms. Suhani Mathur and Jatin Kumar Gaur, Advocates for the Respondent.

Facts of the Case

The department had ordered provisional attachment of the savings bank accounts of the petitioner and directed the banker to not permit any withdrawal from the bank accounts of the petitioner without the permission of the department. It filed writ petition against the order of provisional attachment and contended that the impugned order was ex facie without jurisdiction since it was neither taxable person nor a person covered under Section 122(1A) of the Central Goods and Services Tax (CGST) Act, 2017.

High Court Held

The Honorable High Court noted that the power under Section 83 of the Act allows the department to provisionally attach assets or bank accounts of taxable persons and persons specified under Section 122(1A) of the CGST Act. In the instant case, the petitioner had submitted the account statement which clearly showed that loans & advances were extended to the accused years back and funds received from accused were merely return of same.

The Court further noted that it is not open for department to attach bank accounts of other persons on a mere assumption that funds therein are owned by any taxable person. Therefore, the Court held that the impugned attachment order was to be set aside since petitioner was not a taxable person or a person as specified in section 122(1A).