Court orders unfreezing of accounts, lifts Importer Exporter Code blockage, allows challenge to attachment

The court granted relief to the petitioner by ordering the immediate unfreezing of specific bank accounts and the withdrawal of the blockage of the Importer Exporter Code. Additionally, the court allowed the petitioner to challenge the provisional attachment of other accounts, ensuring that the respondents' actions were subject to judicial review and due process.

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Issues Involved:
1. Coercive measures without show cause notice.
2. Freezing of bank accounts.
3. Blocking of Importer Exporter Code.
4. Presence of a lawyer during investigation.

Detailed Analysis:

Coercive Measures Without Show Cause Notice
The petitioner sought a direction to restrain the respondents from adopting coercive measures without issuing a show cause notice to compel the petitioner to pay further customs duty and/or GST dues. The court examined Section 83 of the CGST Act, 2017, which allows provisional attachment of property to protect government revenue during the pendency of certain proceedings. The court noted that there are two preconditions for the Commissioner to exercise jurisdiction under Section 83: (1) pendency of proceedings under specified sections of the CGST Act, and (2) the Commissioner's opinion that provisional attachment is necessary to protect government revenue. The court found that the garnishee notice issued to the petitioner's bank mentioned proceedings under Sections 67 and 74 of the CGST Act, but the manner in which these proceedings were launched was not clear.

Freezing of Bank Accounts
The petitioner requested the unfreezing of 12 bank accounts. The respondents argued that the provisional attachment was necessary to protect government revenue, citing the investigation which suggested that the petitioner had indulged in fraudulent activities, including the utilization of fake input tax credit (ITC) and claiming fraudulent IGST refunds. The court examined Rule 159 of the CGST Rules, which outlines the procedure for provisional attachment of property. The court emphasized that provisional attachment is a serious measure and should not be used punitively. It also noted that the attachment must be periodically reviewed and can be contested by the affected party. The court found that some of the attached accounts were in the names of individuals who were not the taxable persons and had no allegations against them, making the attachment of these accounts unjustified.

Blocking of Importer Exporter Code
The petitioner sought the unblocking of their Importer Exporter Code. The court referred to the Foreign Trade (Development and Regulation) Act, 1992, which governs the issuance, suspension, and cancellation of Importer Exporter Codes. The court noted that only the Director General of Foreign Trade or an authorized officer can suspend or cancel an Importer Exporter Code, and this must be done following due process, including providing a notice and an opportunity for a hearing. The court found that the respondents were neither the Director General of Foreign Trade nor authorized officers and thus had no jurisdiction to block the petitioner's Importer Exporter Code.

Presence of a Lawyer During Investigation
The petitioner also sought permission to have a lawyer present during their investigation. The court did not provide a detailed analysis or ruling on this issue within the provided text.

Interim Orders:
1. The bank account solely in the name of Ms. Mansi Siddharth Mandavia to be unfrozen immediately.
2. Joint accounts in the names of the petitioner and either Mansi Mandavia or Hriaan Siddharth Mandavia to be unfrozen, with a debit freeze on 50% of the amounts.
3. The petitioner may file an objection regarding other accounts within 7 days, and the Principal Additional Director General must decide on the objection within 3 weeks.
4. The blockage of the petitioner's Importer Exporter Code by the respondents to be withdrawn immediately.

Conclusion:
The court provided significant relief to the petitioner by ordering the unfreezing of certain bank accounts and the withdrawal of the blockage of the Importer Exporter Code. It also allowed the petitioner to contest the provisional attachment of other accounts, ensuring that the respondents' actions were subject to judicial scrutiny and due process.

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