R Enterprises vs. Union Of INDIA & Ors.

Held

The Court held that the communication dated December 6, 2022, issued under Section 83 of the CGST Act, would be read as freezing the bank account only to the extent of Rs. 2.4 crores. This means the petitioner would be free to operate the bank account, allowing withdrawals, provided a minimum balance of Rs. 2.4 crores is maintained. The Court found it inappropriate to interfere with the provisional attachment beyond this amount. Regarding the period prior to December 6, 2022, the Court noted the statement by Respondent No. 3 that no communication was issued to the bank before that date, thus absolving Respondent No. 3 of any grievance for the earlier freezing. The petitioner was granted liberty to approach ICICI Bank for the reasons for freezing the account, and the bank was directed to provide these reasons. The Court also expected the respondents to complete the proceedings expeditiously. All remedies of the petitioner were reserved.

Facts

The petitioner, R Enterprises, filed a writ petition challenging a communication dated December 6, 2022, issued by Respondent No. 3 (a GST authority). This communication directed ICICI Bank to freeze the petitioner's bank account (Account No. 038705500474). The petitioner claimed to have been denied access to its account since November 5, 2021, without being provided any reasons by the bank. The freezing order under Section 83 of the CGST Act was issued because the petitioner was allegedly non-existent and had not responded to summons. Information from DGGI, Ghaziabad, indicated the petitioner was involved in fraudulently availing GST and had received a refund of Rs. 2.4 crores, which was under investigation.

Key Issues

1. Whether the freezing of the petitioner's bank account by Respondent No. 3 under Section 83 of the CGST Act, 2017, is valid, considering the petitioner's claim of not being informed of the reasons and the alleged non-existent status. 2. Whether the petitioner is entitled to operate its bank account to the extent of amounts exceeding Rs. 2.4 crores, which is the alleged refund amount under investigation. Petitioner's Arguments: The petitioner argued that its bank account was frozen without proper notification or justification, and it was denied access since November 5, 2021. They sought clarity on the reasons for the freezing and the ability to operate the account for amounts beyond the disputed refund. Revenue's Arguments: Respondent No. 3 contended that the freezing was necessitated by information suggesting the petitioner was non-existent, had not responded to summons issued under Section 70 of the CGST Act, and was involved in fraudulently availing GST, with a refund of Rs. 2.4 crores under investigation. They relied on Section 83 of the CGST Act for provisional attachment to protect government revenue.