Delhi HC: Bank Account Attachment Should Only Be done If Case Comes U/S 83

The Delhi High Court has ruled that linking bank accounts is a drastic step. The process can only come into existence if the conditions are met according to Section 83 of the GST Act.

The bench, comprising Justice Vibhu Bakhru and Justice Amit Mahajan, has learned that the department is not permitted to attach another person’s bank accounts just on the grounds that it believes the funds belong to any taxable persons.

Section 83 of the GST Act allows the Commissioner to attach the assets of a taxable person for the purpose of a statement. The attachment can be made after the commencement of any advancements. The commissioner believes that only for the objective of protecting government revenue interests. If the order is in writing, the commissioner may attach any property provisionally. It may include a bank account of the taxable person or someone who comes under sub-section (1A) of Section 122.

The respondent, Principal Additional Director General, DGGI, DZU, passed an order. The petitioner challenged the order. The assessee’s saving bank account was provisionally attached to the respondent’s account.

Moreover, the bank branch manager of HDFC Bank had been ordered by the respondent to cease the withdrawals from the petitioners’ bank accounts that were in use with the same PAN numbers without any permission.

According to the statement made by Shri Rajiv Chawla during the investigation of fake firms involved in fake Input Tax Credits, the petitioners’ bank accounts had been attached by the respondent based on that statement.

The statement of Kamal Kumar was noted during the hearings on 06.02.2023. In his statement, he claimed that he and his wife, Mrs. Pooja Khattar, were partners in M/s Shankar/Shankar Trading Company and had the power to manage the bank account. Yet, he frequently left his signature off of his blank checks and gave them to Sumit Maggo and Rajiv Chawla to be cashed. A small commission would be paid to him for it.

Rajiv Chawla was in judicial custody during the time, according to Harpreet Singh, and his custodial statement was recorded on 06.02.02023. He said in his statement that M/s Hindustan Paper Machinery Company is a partnership between him and his wife Shipra Chawla and that the company has a bank account with South Indian Bank.

Because the partners of M/s Hindustan Paper Machinery Industries owned the funds in the petitioners’ bank accounts, their bank accounts had already been attached.

The petitioners claim that the money they got was compensation for advances and loans they gave out.

The statement of accounts that the petitioners have attached shows that over the course of 9 years, money totalling Rs. 12.62 crores was taken out of the petitioner’s account in favour of M/s Hindustan Paper Machinery Company, which is owned by Mr. Rajiv Chawla. The declaration further mentions the petitioner receiving Rs. 6,05,50,000.

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The court stated that it is not required for it to go into the specifics of Rajiv Chawla’s payment to the petitioners. It cannot be a matter of decision in the proceedings. But the petitioners are not taxable individuals. The only assets and bank accounts that may be temporarily attached under Section 83 of the Act are those belonging to the taxable persons listed in Section 122 (1A).