TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Payment gateway operator's bank accounts cannot be attached under Section 83 CGST Act for merchants' tax dues</h1> <h3>Zhudao Infotech Private Limited Versus The Principal Additional Director General & Anr.</h3> Zhudao Infotech Private Limited Versus The Principal Additional Director General & Anr. - 2024 (80) G.S.T.L. 177 (Del.) Issues Involved:1. Legality of the orders attaching ZIPL's bank accounts under Section 83 of the CGST Act.2. Compliance of ZIPL with CGST and RBI guidelines.3. Validity of the objections raised by ZIPL under Rule 159(5) of the CGST Rules.Summary:Legality of the Orders Attaching ZIPL's Bank Accounts:The petitioner, ZIPL, challenged the orders dated 10.10.2022 and 06.10.2022 attaching its bank accounts under Section 83 of the CGST Act. ZIPL argued that there was no ground for the respondents to believe that attaching its bank accounts was necessary in the interest of the Revenue. The court noted that the attachment of ZIPL's Escrow/Nodal account would effectively shut down its business. The respondents alleged that ZIPL was involved in GST evasion and supporting illegal gambling products, but admitted that there was no tangible material to form an informed view regarding these allegations. The court concluded that ZIPL's bank accounts could not be attached for securing the revenue of another taxable person and set aside the impugned orders.Compliance of ZIPL with CGST and RBI Guidelines:ZIPL claimed that it had complied with the KYC requirements and discharged the GST on the amounts charged from merchants for using its online payment platform. The respondents, however, alleged that ZIPL was operating in violation of RBI guidelines and had engaged in activities contravening the Foreign Exchange Management Act, 1999. The court clarified that the scope of the present proceedings was confined to determining the legality of the impugned orders under Section 83 of the CGST Act and not the actions taken by the RBI. ZIPL was directed to comply with RBI's directions unless set aside by a competent court or authority.Validity of the Objections Raised by ZIPL under Rule 159(5) of the CGST Rules:ZIPL's objections under Rule 159(5) of the CGST Rules were initially rejected by the respondents for not being in the correct format. The court directed the respondents to pass a speaking order on ZIPL's objections, which was subsequently done on 01.02.2023. The court found no basis for the various directions issued by respondent no. 1 in the order dated 01.02.2023 requiring ZIPL to obtain NOCs or acknowledgments from the bank accounts of the recipient merchants. The court accepted ZIPL's undertaking to pay the amounts due to the merchants without holding back any amount and directed ZIPL to transfer the remaining amount to its current account.Conclusion:The court set aside the impugned orders attaching ZIPL's bank accounts, with the direction that ZIPL shall make payments due to various merchants directly in their respective bank accounts. The court also clarified that the respondents are not precluded from taking any effective steps in accordance with law to protect government revenues or taking any action against ZIPL if any amount is found due and payable by ZIPL. The petition was disposed of in these terms.
TaxTMI 
TaxTMI 
