2004 (12) TMI 99 - HC - Central Excise

Summary

Issues involved:
The issues involved in the judgment are freezing of bank accounts by the Commissioner, Central Excise and Service Tax without legal authority and its impact on the business operations of the petitioners.

Judgment Details:

Issue 1: Freezing of Bank Accounts
The petitioners, a Private Limited Company and its Managing Director, filed a writ petition seeking to quash the order freezing their bank accounts by the Commissioner, Central Excise and Service Tax. The petitioners argued that no proceedings under Section 110 of the Customs Act had been initiated against them, justifying the freezing of their accounts. The learned Additional Standing Counsel failed to identify any provision under the Central Excise Act permitting such freezing pending investigation. The court, finding no legal basis for the freezing, quashed the order and directed the immediate release of the bank accounts, allowing the petitioners to operate them.

Issue 2: Impact on Business Operations
The petitioners contended that the freezing of their bank accounts had severely affected their business operations, bringing them to a standstill. Despite the seizure of certain materials related to illicit manufacturing of Gutka from the Managing Director's premises, the freezing of accounts was not supported by any legal authority. The court, noting the adverse impact on the petitioners' right to carry on business, held that the actions of the respondents violated the fundamental rights guaranteed under Article 19 of the Constitution of India. Consequently, the court set aside the freezing of accounts, enabling the petitioners to resume their business activities.

In conclusion, the writ petition was allowed, and the order freezing the bank accounts was quashed. The Commissioner was directed to release the accounts immediately, with no costs imposed on either party.