Court invalidates unauthorized bank account freeze under Customs Act, emphasizes procedural requirements

The court ruled in favor of the petitioner, who challenged the freezing of their bank account without notice under the Customs Act. The court found that the attachment was unauthorized as it exceeded the statutory period for provisional attachments and did not adhere to the procedural requirements outlined in Section 110 of the Customs Act. The communication freezing the account was set aside and quashed, allowing the petitioner to operate the bank account. The judgment emphasized the necessity of written orders for attachment, approval from Customs authorities, and adherence to specific timelines for such actions.

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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.

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