FACTS OF THE CASE

The petitioner, Aashish, challenged the freezing (provisional attachment) of his bank account bearing account no. 259560519588 maintained with IndusInd Bank, Rajouri Garden, on the ground that neither a notice nor order was ever communicated to him by the Directorate General of GST Intelligence (DGGI). He became aware of the freezing of the account only when informed by the bank on 1st October 2024. Although one year had elapsed, no de‑freezing or notice was issued. The petition was filed under Article 226 of the Constitution of India.

The DGGI’s stand was that the account was provisionally attached under Section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act) in connection with investigation of tax evasion involving substantial Input Tax Credit (ITC) fraud. DGGI asserted that summons under Section 17 were issued and a statement was recorded. The provisional attachment order restricted debit to amounts not exceeding Rs. 19.39 crore. A physical inspection of the petitioner’s business premises revealed the location to be non‑existent at the registered address.

ISSUES INVOLVED

  1. Whether the provisional freezing of the petitioner’s bank account without issuance of notice and order to the petitioner was legally sustainable.
  2. Whether the DGGI’s actions under Section 83 of the CGST Act were valid in absence of petitioner’s knowledge and statutory compliance.
  3. Whether concealment of material facts by DGGI in the writ petition impacted the remedy available to the petitioner.

PETITIONER’S ARGUMENTS

  • The petitioner contended that the freezing/attachment of the bank account was done without any notice or order, violating principles of natural justice.
  • More than a year had lapsed, yet there was no communication or reasonable opportunity afforded to the petitioner to contest the attachment.
  • The petitioner argued that the attachment without notice was arbitrary and ultra vires statutory requirements in Section 83 of the CGST Act. 

RESPONDENT’S ARGUMENTS

  • DGGI maintained that the action of freezing the bank account was taken under Section 83 of the CGST Act due to investigation into alleged GST evasion and fraudulent Input Tax Credit availed by the petitioner under the name “Steelmart India.”
  • Respondents highlighted that summons were issued, the statement was recorded, and the provisional attachment was necessary to safeguard the revenue.
  • The physical inspection revealed the petitioner’s business premises to be non‑existent, corroborating the seriousness of the alleged GST fraud.
  • The respondents contended that the writ petition was bereft of material facts regarding the GST investigation and that objections under Rule 159(5) of the CGST Act could be filed with the department.

COURT’S ORDER / FINDINGS

The High Court held that:

  • Although the petitioner was not served with the freezing order, the writ petition failed to disclose relevant material facts such as the departmental investigation, summons issued, and alleged fraudulent claim of ITC running into crores.
  • The court noted concealment of material facts by the petitioner in the writ petition.
  • The petition was dismissed with costs of Rs. 1,00,000 to be deposited with the Delhi High Court Staff Welfare Fund within two weeks.
  • The court clarified that the petitioner was free to file objections under Rule 159(5) of the CGST Act, and respondents were at liberty to proceed in accordance with law.

IMPORTANT CLARIFICATIONS

  • Section 83 CGST Act provides for provisional attachment to protect revenue, valid for only a period of one year.
  • The High Court emphasized that full disclosure of material facts is a pre‑requisite in writ petitions under Article 226.
  • Lack of notice alone may not be sufficient to grant relief if petitioner fails to disclose material facts and statutory context.
  • Objections under Rule 159(5) can be instituted before the department for reconsideration.

SECTION(S) INVOLVED

  • Article 226, Constitution of India
  • Section 83, Central Goods and Services Tax Act, 2017
  • Section 17 & Section 67, CGST Act (investigative context)
  • Rule 159(5), CGST Rules

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/75419112025CW166802025_172103.pdf

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