M/S New Light Overseas vs. Directorate General Of Goods And Services Tax Intelligence, Jaipur Zonal Unit & Anr.

Held

The Court held that the order freezing the petitioner's bank account, which was made on November 22, 2022, could not survive beyond the period of 12 months as prescribed under Section 83(2) of the Central Goods and Services Tax Act, 2017. The Court noted that in the absence of any further or fresh order having been made, the continued freeze of the bank account in question would not sustain. Consequently, the Court allowed the writ petition and directed the respondent/financial institution to lift all restraints on the bank account forthwith. The ratio decidendi is that a bank account freeze order under Section 83 of the CGST Act is time-bound and lapses after 12 months unless extended by a fresh order.

Facts

The petitioner, M/s New Light Overseas, filed a writ petition before the Delhi High Court challenging the freezing of its bank account. The freezing was done by the Directorate General of Goods and Services Tax Intelligence, Jaipur Zonal Unit, purportedly under Section 83 of the Central Goods and Services Tax Act, 2017. The order to freeze the bank account was issued on November 22, 2022. The petitioner contended that the freeze order was no longer valid as it had exceeded the statutory period of 12 months prescribed under Section 83(2) of the Act, and no fresh or subsequent order had been issued.

Key Issues

1. Whether the continued freeze of the petitioner's bank account, pursuant to an order passed on November 22, 2022, is sustainable beyond the statutory period of 12 months as stipulated in Section 83(2) of the Central Goods and Services Tax Act, 2017, in the absence of any further or fresh order. The petitioner argued that the freeze order, issued under Section 83 of the Act, had an inherent time limitation of 12 months as provided in Section 83(2). Since this period had expired without any renewal or new order, the continued restraint on the bank account was illegal and unsustainable. The respondent (Directorate General of Goods and Services Tax Intelligence) did not record any specific arguments in the judgment regarding the validity of the continued freeze beyond the statutory period.