2025 (1) TMI 881 - HC - GST

Freezing the bank account - legality of seizure u/s 67 of the Central Goods and Services Tax Act, 2017 during the search and seizure operations - HELD THAT - In terms of Section 67 (3) of CGST Act, all documents, books or things seized under Section 67 (2) of CGST Act, are required to be returned to the person from whom the same are seized within the period not exceeding 30 days from the date of issuance of the notice. In these circumstances, the Commissioner may retain the documents, records, laptops, CPUS and Mobile Phones which were seized but only till the time, the same are required and in any event not later than 30 days after issuance of notice, as required under Section 67 (3) of the CGST Act, 2017 - In the meanwhile, the Commissioner shall ensure that copies of the documents and data on devices available in the mobile phones, CPUs, laptops and other records, which were seized are made available to the petitioners. It is submitted on behalf of the petitioners that although the petitioners have provided a hard disk of 01 Terabyte, the respondents are compelling the petitioners to give further hard disks - Commissioner is requested to examine this aspect and ensure that the copy of the data is not withheld from the petitioners. List for hearing on the aforesaid aspect on 20.08.2024, the date already fixed.

1. ISSUES PRESENTED and CONSIDERED

The legal judgment from the Delhi High Court addresses the following core legal issues:

Whether the provisional attachment of the petitioners' bank accounts by the Commissioner of Central Tax, Delhi West, was justified.
Whether the seizure of the petitioners' assets, including laptops, CPUs, mobile phones, and other documents, was lawful and if the petitioners are entitled to their return.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Provisional Attachment of Bank Accounts

Relevant Legal Framework and Precedents: The petitioners challenged the orders dated 16.04.2024 and 20.11.2023, which provisionally attached their bank accounts under the authority of the Commissioner of Central Tax, Delhi West. The legal framework involves the powers granted to tax authorities under the Central Goods and Services Tax Act, 2017 (CGST Act).
Court's Interpretation and Reasoning: The court noted that it had previously allowed the petitioners to apply for limited operations of their bank accounts to ensure the company could continue as a going concern. The petitioners complied by appearing before the Commissioner, who subsequently issued a speaking order justifying the continued freezing of the accounts.
Key Evidence and Findings: The Commissioner provided detailed reasons for maintaining the attachment of the bank accounts, which were not contested further by the petitioners at this stage.
Application of Law to Facts: The court acknowledged the procedural compliance by the petitioners and the Commissioner's adherence to the legal framework in issuing a speaking order.
Treatment of Competing Arguments: The petitioners did not press for relief regarding the freezing of the bank accounts during this stage of the proceedings.
Conclusions: The court did not provide relief concerning the bank accounts, given the procedural steps taken by both parties and the Commissioner's detailed justification.

Issue 2: Seizure and Return of Assets

Relevant Legal Framework and Precedents: The legal provisions under Sections 67(2) and 67(3) of the CGST Act were central to this issue. These sections outline the conditions under which documents and goods can be seized and the requirement for their return within a specified period.
Court's Interpretation and Reasoning: The court recognized the petitioners' entitlement to copies of the seized documents and data under Section 67(5) of the CGST Act. The court emphasized the statutory requirement to return seized items within 30 days of notice issuance.
Key Evidence and Findings: The Commissioner had allowed the petitioners to obtain copies of the documents and data from the seized assets. However, the petitioners raised concerns about the need to provide additional hard disks for data copying.
Application of Law to Facts: The court directed the Commissioner to ensure that copies of the data on the seized devices are not withheld and to address the issue of additional hard disks.
Treatment of Competing Arguments: The respondents contested the petitioners' request, but the court noted the absence of a counter-affidavit from the respondents on record.
Conclusions: The court ordered the Commissioner to facilitate the provision of data copies to the petitioners and scheduled a further hearing to address unresolved aspects.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: The court stated, "In terms of Section 67 (3) of CGST Act, all documents, books or things seized under Section 67 (2) of CGST Act, are required to be returned to the person from whom the same are seized within the period not exceeding 30 days from the date of issuance of the notice."
Core Principles Established: The court reinforced the procedural rights of individuals under the CGST Act, particularly concerning the return of seized items and the provision of copies of seized data.
Final Determinations on Each Issue: The court did not grant immediate relief regarding the bank accounts but emphasized the petitioners' rights to access copies of seized data. Further proceedings were scheduled to ensure compliance with the court's directions.

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