Tirupati Overseas vs. The Principal Commissioner Of GST And Ors

Facts

The petitioners, including Tirupati Overseas, Sameer Garg, Gian Chand Singhal, Aashna Singhal, and Mahadev Software Private Limited, filed writ petitions before the Delhi High Court challenging the freezing of their bank accounts. They contended that their accounts were frozen under Section 83(1) of the CGST Act for periods exceeding one year, and in some cases, up to three years. They argued that as per Section 83(2) of the CGST Act, such orders cease to be operative after one year. The GST department stated that fresh freezing orders had been issued, and one year had not elapsed since their issuance. The petitioners claimed they had not received these fresh orders. In one instance, ICICI Bank stated the petitioner's account was closed in July 2021.

Held

The Court directed the respondents to furnish copies of the respective orders passed under Section 83(1) of the CGST Act/DGST Act for freezing the bank accounts of the petitioners. The respondent Bank was also directed to communicate the reasons for freezing the bank accounts. The Court advised the petitioners that if they were aggrieved by any of these Section 83(1) orders, they were at liberty to file objections under Rule 159(5) of the Central Goods and Services Tax Rules, 2017. The Court stated that any such objections, if filed, would be considered in accordance with the law, and all rights and contentions of the parties were reserved. The Court did not decide on the operative validity of the original freezing orders but provided a procedural path for the petitioners to challenge any existing or new orders.

Key Issues

1. Whether the orders passed under Section 83(1) of the Central Goods and Services Tax Act, 2017 (CGST Act) for freezing bank accounts have ceased to be operative due to the expiry of the one-year period stipulated in Section 83(2) of the CGST Act, given the petitioners' contention that the freezing has persisted for over a year, and in some cases, up to three years. The petitioners argued that Section 83(2) of the CGST Act mandates that an order of provisional attachment under Section 83(1) shall cease to have effect after the expiry of one year from the date of the order. They contended that since their bank accounts have been frozen for more than a year, the said orders are no longer operative and should be revoked, leading to the de-freezing of their accounts. The respondents (GST Department) argued that fresh orders for freezing the bank accounts have been issued, and a period of one year has not yet elapsed since the issuance of these new orders. They did not rely on any specific circulars or precedents but based their argument on the issuance of subsequent orders.