The Rajasthan High Court in its recent order in the case of M/s Padmavati Enterprises has quashed the order freezing the bank account of the petitioner for more than one year pending investigation under CGST Act.
Facts of the Case:
The investigation under CGST Act was pending against the petitioner company M/s Padmavati Enterprises.
The impugned order dated 04.06.2019 for freezing of bank account was passed by Deputy Commissioner of Customs (Preventive), in view of the investigation initiated against the petitioner company by Anti Evasion Wing of Central Goods and Service Tax, Commissionerate, Jaipur. Such bank account was still frozen despite lapse of period more than one year.
Arguments of the petitioner:
- The petitioner submitted that the investigation in the present case had been initiated and was
being carried out under the provisions of CGST Act, 2007. Hence, freezing of the bank account by Deputy Commissioner (Customs) under the provisions of Customs Act, 1962 was not permissible.
- The petitioner further submitted that no power to issue orders for freezing of bank accounts was available under the Customs Act, 1962 and the said power had only been introduced by way of amendment to Section 110(5) inserted by the Finance (No.2) Act, 2019, dated August 1, 2019.
- The petitioner also contended that the power to freeze the bank account had only been granted to the Commissioner of Customs for a period not exceeding six months with the maximum cap of one year.
- The petitioner also placed reliance on the case of Balaji Enterprises vs. Union of India (2017 (356) ELT 529 (Del.) and Khaja Mustafa Kamal vs. Union of India (2016 (337) ELT 221 (Bom.)
Rajasthan High Court: Judgment
- The impugned order was passed before the amendment in Section 110(5) of the Customs Act, 1962 had come in operation. Moreover, as per the amendment also, the account cannot be frozen beyond the period of one year.
- Keeping in view the facts and circumstances of the case, we are of the opinion that the petition deserves to be allowed.
In view of above deliberations, the division judge bench of Justice Sabina and Justice Chandra Kumar Songara allowed the petition and quashed the order passed by the Deputy Commissioner of Customs (Preventive) and held that the account cannot be frozen beyond the period of one year. Consequently, the bank account of the petitioner be allowed to be operated by the petitioner company.
READ / DOWNLOAD JUDGEMENT:
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