M/S Unity Traders vs. Principal Additional Director-Dggi & Anr.
Original PDF →Facts
The Petitioner, M/s Unity Traders, filed a writ petition challenging the freezing of its bank accounts by the Principal Additional Director-DGGI, vide a communication dated June 16, 2024. The Petitioner was informed that an appeal had been filed against an Order-in-Original dated January 28, 2025. On May 26, 2025, the Court was informed that one bank account had been restored. However, the Petitioner's grievance was that two other accounts, opened on the same PAN, were also frozen based on the June 16, 2024 communication. The Petitioner had received a letter from Kotak Mahindra Bank indicating that three of its accounts and its proprietor's accounts were frozen.
Held
The Court held that in view of the fact that an appeal against the impugned Order-in-Original dated January 28, 2025, had been filed in terms of Section 107 of the Central Goods and Services Tax Act, 2017, the final order was automatically stayed. Consequently, the freezing of the Petitioner's bank accounts was deemed unjustified. The Court directed Kotak Mahindra Bank to de-freeze all three accounts with immediate effect. The Department was also instructed to issue a communication to Kotak Mahindra Bank calling upon them to lift the debit freeze. The petition was disposed of in these terms.
Key Issues
1. Whether the freezing of the Petitioner's bank accounts by the DGGI was justified, considering an appeal against the Order-in-Original dated January 28, 2025, had been filed and the final order was automatically stayed under Section 107 of the Central Goods and Services Tax Act, 2017? Petitioner's Contention: The Petitioner argued that since an appeal was filed against the Order-in-Original, the order itself was stayed, and consequently, the freezing of bank accounts based on that order was unjustified. They relied on the principle that a stay on the final order should also lead to the lifting of coercive measures taken pursuant to that order. Revenue's Contention: The Respondent (DGGI) did not appear to have made specific arguments against the Petitioner's claim regarding the freezing of accounts in light of the stay order. Their submission was primarily focused on the status of the appeal and the restoration of one account.
Sections Cited
Section 107
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
O R D E R % 28.05.2025
This hearing has been done through hybrid mode.
The present petition has been filed by the Petitioner - M/s Unity Traders under Articles 226 and 227 of the Constitution of India challenging the freezing of the bank accounts of the Petitioner vide communication dated 16th June, 2024. 3. On the last date of hearing i.e., 26th May, 2025, the Court was informed that an appeal has been filed against the impugned Order-in-Original dated 28th January, 2025. In view thereof, ld. Sr. Standing Counsel (‘SSC’) for the Respondent was directed to seek instructions.
Today, Mr. Tyagi, ld. SSC has sought instructions and submits that vide communication dated 27th May, 2025, the account number 5046084137 has been restored and freezing orders have been lifted. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 20:24:45 5. However, the grievance of the Petitioner is that two more accounts have been opened on the same PAN number and in view of the communication dated 16th June, 2024, even the said bank accounts have also been frozen by the Bank.
A perusal of the record would reveal that in the communication dated 16th June, 2024 by the Directorate of General GST Intelligence (hereinafter ‘DGGI’), it states as under. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 20:24:45 7. Pursuant thereto the Petitioner is stated to have received a letter from the Kotak Mahindra Bank that the following three accounts of the Petitioner and its proprietor have been frozen and debit freeze has been imposed.
In view of the fact that the appeal in respect of the impugned Order-in- Original has already been filed in terms of Section 107 of Central Goods and Services Tax Act, 2017, the final order dated 28th January, 2025 is automatically stayed. Therefore Kotak Mahindra Bank is directed to de-freeze all three accounts with immediate effect. The Department shall also issue a communication to the Kotak Mahindra Bank calling upon them to lift the debit freeze.
The petition is disposed of in these terms. Pending applications, if any, are also disposed of. PRATHIBA M. SINGH, J. RAJNEESH KUMAR GUPTA, J. MAY 28, 2025/dk/Ar. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 20:24:45
Reproduced from the public record of the Delhi High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.