2020 (10) TMI 74 - HC - Customs

Attachment of Bank Accounts - case of petitioner is that attachment of the bank account has continued beyond the statutorily permissible period and therefore should be interfered with - HELD THAT - There are no good reason to sustain the communication dated 19th April, 2018 as more than two years have elapsed since the bank account was frozen - sub-section (5) of Section 110 speaks of provisional attachment. Dictionary meaning of provisional is arranged or existing for the present, possibly to be changed later ; Black s Law Dictionary, Eight Edition, has defined it as temporary or conditional . Therefore, the statute has provided a definite time line beyond which the attachment becomes bad in law. The impugned communication dated 19th April, 2018 is hereby set aside and quashed - Respondents are directed to allow petitioner to operate its bank account with IndusInd Bank - Petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to communication freezing bank account without notice under Customs Act.

Analysis:
The petitioner challenged a communication from the Directorate of Revenue Intelligence freezing their bank account without notice. The petitioner, engaged in trading precious stones, argued all statutory dues were paid, and no outstanding demands existed. The freezing was requested under Section 108 of the Customs Act, which does not allow for bank account attachment. The respondent justified the attachment as necessary at that time. However, the court noted that Section 110 of the Customs Act, dealing with seizure, allows provisional bank account attachment for protecting revenue or preventing smuggling, with strict procedural requirements. A recent decision clarified that this provision has prospective application from August 2019 and cannot be invoked retrospectively. The court highlighted the necessity of a written order for provisional attachment, approval from Customs authorities, and a maximum six-month period for attachment. Since no such order was produced, the attachment was deemed unauthorized.

The court emphasized that the freezing exceeded the statutory period, as provisional attachments are temporary and subject to a specific timeline. The communication from 2018 was set aside and quashed, directing the respondents to allow the petitioner to operate the bank account. The judgment, allowing the writ petition, did not award any costs. The order was to be digitally signed and acted upon upon receipt of a digitally signed copy.

This detailed analysis of the judgment showcases the court's interpretation of the Customs Act provisions regarding bank account attachment, the importance of procedural compliance, and the consequences of unauthorized freezing beyond the permissible period. The ruling provides clarity on the limitations of such actions and upholds the petitioner's right to operate their bank account.