Pradeep Kumar Siddha vs. Union Of INDIA Thr Central Govt. Advocates And Ors

Facts

The petitioner, Shri Pradeep Kumar Siddha, filed a writ petition challenging the action of the respondents (Union of India and others) in unilaterally debiting Rs. 62,32,400/- from his Axis Bank account on May 20, 2022. This action occurred despite a previous court order on May 2, 2022, directing the respondents to unfreeze the petitioner's account. The petitioner contended that no instructions were given by him to Axis Bank for this debit. The respondents, represented by Ms. Bharucha, stated that the petitioner did not cooperate even after the court order, leading them to have the amount debited. The court expressed strong disapproval of the authorities' power to debit an account without the holder's permission and without informing them. Consequently, the respondents were directed to deposit the entire amount with the Registrar (Judicial-I) by July 28, 2022, and the concerned officer was ordered to file a personal affidavit explaining the legal basis for the debit. The matter was listed for further hearing.

Held

The Court held that the respondents had failed to demonstrate the legal basis for unilaterally deducting the amount from the petitioner's bank account. The Court found Section 79(1)(c)(i) of the CGST Act to be inapplicable for such an action. The respondents' counsel, on instructions, stated that the amount deposited in court could be withdrawn and returned to the petitioner's bank account. The Court directed the respondents to file an affidavit confirming the timeline for crediting the amount back to the petitioner's account. Upon filing of this affidavit within two weeks, the Registrar (Judicial) would permit the respondents to withdraw the amount, which then had to be credited to the petitioner's bank account within a further period of two weeks. The writ petition was disposed of accordingly.

Key Issues

1. Whether the respondents had the legal authority under Section 79(1)(c)(i) of the CGST Act to unilaterally debit the petitioner's bank account without his consent or prior intimation, and transfer the funds to the Electronic Cash Ledger. Petitioner's argument: The petitioner argued that Section 79(1)(c)(i) of the CGST Act was entirely inapplicable to the facts of the case, as it did not grant the authorities the power to unilaterally debit funds from a taxpayer's bank account without proper authorization or procedure. Respondents' argument: The respondents relied on Section 79(1)(c)(i) of the CGST Act as the legal basis for their action. They contended that this provision allowed them to recover tax dues by issuing notices to persons from whom money was due to the taxpayer or who held money for the taxpayer. They also argued that the petitioner's lack of cooperation justified their action.