2024 (9) TMI 1286 - HC - GST

Freezing of the financial assets/demat accounts of the Petitioner - five demat accounts of petitioner have been attached without even issuing a notice let alone giving an opportunity to present petitioner s case - Violation of principles of natural justice - HELD THAT - The petitioner ought to have been given notice before the impugned attachment orders were issued to the depository participants and/or to NSDL. The depository participants, viz., Kotak Mahindra Bank Limited, Geojit Financial Services Limited, HDFC Bank Limited, Religare Broking Limited are hereby informed that the attachment orders have been quashed and set aside. Petition disposed off.

Summary

Issues:
1. Petitioner seeks writs to quash freezing of financial assets/demat accounts.
2. Attachment of demat accounts without notice in GST demand proceedings.
3. Lack of notice before attachment orders were issued.
4. Quashing and setting aside of all five impugned orders.
5. Information provided to depository participants about quashing of attachment orders.
6. Undertaking to defreeze accounts by a specified date accepted.

Analysis:
The petitioner filed a petition under Article 226 seeking writs to quash the freezing of financial assets and demat accounts. The grounds raised included the attachment of five demat accounts without prior notice in connection with GST demand proceedings against a company in which the petitioner was a director. The petitioner claimed to have resigned before the relevant period, while the state representative acknowledged that notice should have been given before the attachment orders were issued. Consequently, all five impugned orders were quashed and set aside by the court.

The court specifically directed depository participants, including Kotak Mahindra Bank Limited, Geojit Financial Services Limited, HDFC Bank Limited, and Religare Broking Limited, to be informed that the attachment orders had been quashed and set aside. Detailed information about the frozen accounts was provided, including DP ID, client ID, BO ID, and the respective depository participants involved. Additionally, the state representative assured the court that all depository participants and the National Securities Depository Limited (NSDL) would be informed about the defreezing of the accounts by a specified date, with a copy to the petitioner, which was accepted as an undertaking by the court officer present during the proceedings.

Ultimately, the petition was disposed of with no order as to costs, indicating a resolution in favor of the petitioner regarding the quashing of the attachment orders and the subsequent defreezing of the demat accounts. The judgment emphasized the importance of providing notice before taking such actions in matters related to financial assets and demat accounts, ensuring procedural fairness and adherence to legal principles.