Court Upholds Bank Account Attachment; Conditions Set for Defreezing Pending Fixed Deposit and Bond Execution.

The HC upheld the validity of the Respondents' communication dated 19th October 2023, under Section 110(5) of the Customs Act, 1962, regarding the attachment of the Petitioners' bank accounts. The Court imposed conditions for the Petitioners to secure a fixed deposit of Rs. 1.50 crore in favor of the revenue and execute a bond to protect against liabilities. Upon fulfilling these conditions, the Respondents are to defreeze the bank accounts. A show cause notice must be issued within six months, with proceedings completed within a year. The Writ Petitions were disposed of without costs, keeping all contentions open for future consideration.

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Issues:
The challenge in the present Petitions is to a communication dated 19th October, 2023 whereby the Respondents have attached bank accounts of the Petitioners under Section 110(5) of the Customs Act, 1962.

Brief Facts:
The Petitioners are engaged in the business of buying and selling gold. The office premises of the Petitioners were searched on 20th September 2023, and statements were recorded under Section 108 of the Customs Act, 1962. Subsequently, the Respondents provisionally attached the bank accounts of the Petitioners, leading to the filing of the present Petitions challenging the attachment.

Petitioners' Arguments:
The Petitioners contended that the communication dated 19th October 2023 was not communicated to them directly and did not provide reasons for the attachment. They argued that there is no evidence of their involvement in smuggling goods, making the attachment unlawful under Section 110(5) of the Customs Act, 1962.

Respondents' Arguments:
The Respondents alleged that the Petitioners engaged in transactions with non-existent entities, raising doubts about the legitimacy of their purchases. They claimed that the Petitioners' involvement in these transactions indicated potential smuggling activities, justifying the bank account attachment under Section 110(5) of the Customs Act, 1962.

Court's Decision:
The Court determined that the communication dated 19th October 2023 constituted a valid order under Section 110(5) of the Customs Act, 1962. Considering the substantial amount involved in the transactions under scrutiny, the Court imposed conditions to safeguard the revenue and the Petitioners' business interests.

Order:
1. The Petitioners to maintain a fixed deposit of Rs. 1.50 crore marked in favor of the revenue.
2. The Petitioners to execute a bond to protect the revenue from potential liabilities.
3. Upon compliance with the above conditions, the Respondents to defreeze all bank accounts.
4. Show cause notice to be issued within six months, and proceedings to be completed within a year.
5. Writ Petitions disposed of with no costs, and all contentions of the parties kept open for future consideration.

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