Shocking abuse of power by GST authorities

In a recent decision in the case of M/S. VIKAS ENTERPRISES VERSUS COMMISSIONER OF CENTRAL TAX (GST) , DELHI NORTH & ANR. [2023 (8) TMI 239 - DELHI HIGH COURT], the hon’ble Delhi High Court has, directed to remove debit freeze on a bank account of a taxpayer wherein the order was passed by a Superintendent. As per the GST law, an order for freezing a bank account can be passed by a Commissioner only. The Commissioner also could have passed such an order only if he is satisfied that it is necessary to pass such an order for protecting the interest of revenue. In the present case, the order was passed by the Superintendent only. Even the required form DRC-22 was also not issued. 

Attaching a bank account or other assets of a taxpayer is a draconian step and would have a serious adverse effect on the business of the taxpayer. Recently, the hon’ble Supreme Court has, in Radha Krishan Industries Vs. State of Himachal Pradesh, observed that such drastic powers must be exercise only where it is necessary. Yet, this has made little difference to the concerned officer while passing such an order and that too, without having the requisite authority under the law. 

The taxpayer assuming that the order for attachment was passed following the due process of law, approached the Commissioner for relief. However, the Commissioner did not respond to his application as no such order was issued by him. Yet, the Commissioner did not make any attempt to inquire as to why a taxpayer was forced to make such an application in the first place. It clearly reflects from the plain facts that someone in his office has misused his position and issued an order without an authority under the law. Was he not supposed to inquire about and take the remedial action?

Finally, the hon’ble Delhi High Court has ordered for defreezing of the bank account vide order dated 31st July 2023 whereas the bank account was attached on 25th March 2022 ie after more than a year. Interestingly, the Section 83 provides that a bank account can be freezed only for one year. Perhaps the time limit applies to legally issued orders only.  

Finally, what happens to the officer concerned? Or to his supervising commissioner. The officer gets away by cost of Rs. 5,000/- and not even a word for the commissioner. So, cost of Rs. 5,000/- for illegally freezing bank account of a taxpayer for more than a year. Would we say justice served? Or the order deterrent enough for other officers?