The Delhi High Court has ruled that the business operations of an assessee cannot be prejudiced by the complete attachment of its bank account, especially when tax proceedings are still pending.
M/s Brijbihari Concast Pvt. Ltd., a company engaged in manufacturing and trading mild steel products, had challenged the provisional attachment of its bank account containing approximately ₹2.75 crores. The company argued that despite the attachment order, no show cause notice had been issued even after a year had passed.
The Directorate General of Goods and Services Tax Intelligence (DGGI) had earlier conducted an investigation at the company’s premises, where they alleged finding excess stock compared to the company's records. Based on this, the DGGI provisionally attached the company’s bank account under Section 67 of the CGST Act, 2017, and claimed a GST evasion of ₹15.09 crores.
Highlighting the Petitioner's compliance, the Court noted:
"M/s Brijbihari Concast Pvt. Ltd. has paid ₹116.57 crores towards GST and ₹4.06 crores towards Income Tax in the last three years without any delay."
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The petitioner submitted that the alleged tax evasion was determined merely by "eye estimation" and no concrete proceedings or show cause notice had been initiated so far.
On the other hand, the Respondents contended that a show cause notice was in process and that the department has a period of three years to issue it.
The Court emphasized that:
“Even if the amount of ₹15.09 crores is considered, it cannot be said that the entire amount is immediately payable. The Petitioner's business cannot be prejudiced by complete attachment of bank accounts."
The Court acknowledged that the Petitioner is a running business paying substantial taxes and employing around 150 individuals, directly and indirectly. Given these facts and the financial hardship caused by the full attachment, the Court directed:
"It would be sufficient at this stage if 10% of the amount is secured by maintaining a minimum balance in the bank account."
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Accordingly, the High Court permitted Brijbihari Concast Pvt. Ltd. to operate its account, provided it maintains a minimum credit balance of ₹1.5 crores. Additionally, it directed that no third-party rights should be created in the company's property located at 9, Bonjha G.T. Road, Ghaziabad until the final adjudication.
The petition was thus disposed of with these conditions.
Appearance: Mr. R.P. Singh, Mr. Rahul Ranjan, Mr. Anant Vijay & Mr. Nirmal Dixit, Advs for Petitioner; Mr. Atul Tripathi, SSC with Mr. Shubham Mishra, Adv for Respondent
Case title: M/S Brijbihari Concast Pvt. Ltd. (Through Its Director Sh. Rajeev Agarwal) v. Directorate General Of Goods And Services Tax Intelligence Meerurt Zonal Unit (Through Its Additional Director General) & Anr.
Case no.: W.P.(C) 8433/2024
