Facts of the Case

The petitioner, M/s Vikas Enterprises, challenged a communication issued by the Superintendent (Anti-Evasion), directing the State Bank of India to:

  • Furnish financial documents relating to the petitioner, and
  • Freeze the petitioner’s bank account by prohibiting any debit without prior departmental approval.

The petitioner contended that such freezing was done without any legal authority and not in compliance with statutory provisions under the CGST Act.

Issues Involved

  1. Whether a bank account can be frozen by a tax officer without invoking Section 83 of the CGST Act.
  2. Whether an officer below the rank of Commissioner is empowered to order freezing of bank accounts.
  3. Whether failure to follow due process under CGST provisions renders such action invalid.

Petitioner’s Arguments

  • The impugned communication had no statutory backing under the CGST Act.
  • Only the Commissioner is authorized under Section 83 to order provisional attachment.
  • No order in Form DRC-22 was issued.
  • The freezing of a cash credit account severely hampered business operations.
  • Objections filed under Rule 159(5) were ignored by the authorities. 

Respondent’s Arguments

  • The respondents referred to Section 83 of the CGST Act to justify their action.
  • It was argued that the freeze would lapse after one year.
  • However, the respondents failed to identify any specific legal provision empowering the Superintendent to issue such directions.

Court Findings / Order

The Delhi High Court held:

  • The impugned communication was without authority of law.
  • Section 83 empowers only the Commissioner, not subordinate officers, to order attachment.
  • No valid order under Section 83 or Form DRC-22 was issued.
  • Freezing of bank accounts has serious adverse consequences on business operations.

Final Order

  • The Court set aside the communication to the extent it froze the bank account.
  • Directed authorities to act strictly in accordance with law.
  • Imposed cost of ₹5,000 on the respondents, recoverable from the concerned officer.

Important Clarifications by Court

  • Power under Section 83 is drastic and must be exercised cautiously.
  • Such power can only be used:
    • By the Commissioner
    • Upon satisfaction that it is necessary to protect revenue
  • Unauthorized freezing of accounts violates statutory safeguards and due process.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/VIB31072023CW94952023_121924.pdf

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