Challenging the Jurisdiction: Delhi High Court Sets Aside Bank Account Attachment Order

Introduction:
In a recent judgment, the Delhi High Court addressed an order of provisional attachment of bank accounts issued by the Principal Additional Director General of the Directorate General of Goods and Services Tax Intelligence (DGGI). The court ruled in favor of the petitioners, Sakshi Bahl and Anr., setting aside the attachment order on the grounds that it lacked jurisdiction. The case sheds light on the importance of adhering to the provisions of the Central Goods and Services Tax Act, 2017.

Background:
The case, identified as W.P.(C) 3986/2023, involved the provisional attachment of the savings bank accounts of Sakshi Bahl and Anr. by the respondent, the Principal Additional Director General of DGGI, DZU. The attachment order was issued based on statements made during an investigation into fake firms involved in fraudulent Input Tax Credit claims.

The Petitioners' Argument:
The petitioners contended that they were neither taxable persons nor covered under Section 122(1A) of the Central Goods and Services Tax Act, 2017. Therefore, they argued that the attachment order was without jurisdiction.

The Respondent's Counter-Argument:
The respondent, through the Senior Standing Counsel, Mr. Harpreet Singh, justified the attachment by presenting statements made during the investigation. One of the statements indicated that funds from the bank accounts in question had been transferred to the petitioners. The respondent argued that the funds belonged to the partners of M/s Hindustan Paper Machinery Industry, who were the alleged beneficiaries of the fraudulent invoices.

Court's Analysis and Ruling:
Upon reviewing the case, the court referred to Section 83 of the Central Goods and Services Tax Act, which empowers the Commissioner to provisionally attach the assets of taxable persons. The court emphasized that this power is limited to taxable persons and individuals specified in Section 122(1A) of the Act.

Since the petitioners were neither taxable persons nor fell under the mentioned provision, the court concluded that the attachment order lacked jurisdiction. It further stated that the power to attach bank accounts should be exercised within the limits prescribed by Section 83, and the conditions specified therein must be satisfied.

Consequently, the court set aside the impugned attachment order, emphasizing that such a draconian measure should only be taken after satisfying the conditions specified in the Act. However, the court clarified that its order did not preclude the respondents from taking other lawful steps to protect revenue.

Conclusion:
The Delhi High Court's decision in the case of Sakshi Bahl & Anr. v. The Principal Additional Director General reinforces the importance of adhering to the provisions of the Central Goods and Services Tax Act, 2017. The ruling emphasizes that the power to provisionally attach bank accounts should be exercised within the prescribed limits and should not extend beyond the jurisdiction granted by the law. This judgment serves as a reminder of the need for due process and the proper application of the law to ensure a fair and just system.

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