2023 (11) TMI 271 - HC - Customs

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

Bharat F. Parmar Karta of M/s. Kaka Gold Versus Union of India, through the Secretary, Ministry of Finance & Ors.

The HC upheld the validity of the Respondents' communication dated 19th October 2023, under Section 110(5) of the Customs Act, 1962, regarding the ... Provisional Attachment of bank accounts of the Petitioners - legality of letter dated 19th October 2023, in terms of Section 110(5) of the Customs Act, 1962 or not. Petitioner submitted that the letter addressed to the bankers were not communicated to the Petitioners and furthermore the said letter cannot be termed as an order under Section 110(5) of the Customs Act, 1962. HELD THAT:- The letter dated 19th October 2023 can be construed as an order for the purpose of Section 110(5) of the Customs Act, 1962. The total purchase is from the three parties referred to herein-above by the Petitioners aggregates to Rs. 22 crore and the duty calculated at 10% on the said amount would be Rs. 2 crore, assuming the Respondents are correct in their contentions. At the same time, the Petitioners have attended the summons and they are cooperating with the investigation. The Respondents also need to be protected in case of any demand arising on account of the investigation. The Petitioners’ business should also not to be affected by the attachment of the bank account and at the same time, the interest of the revenue should also be protected, therefore, looking at the facts of the present case and to protect the revenue, following order can be passed to meet the ends of the justice. The Petitioners to keep a sum of Rs. 1.50 crore as a fixed deposit and the said fixed deposit and a lien would be marked in favour of the revenue with respect to the said fixed deposit of Rs. 1.50 crore - Petitioners would execute bond to protect the revenue from liability arising out of the any order-in-original to be passed - petition disposed off. 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.