TaxTMI 
TaxTMI 
2026 (9) TMI 968
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.... reselling of various brands, gift vouchers/cards, etc. Initially, this writ petition was filed seeking the following reliefs:- "(i) For issuance of the writ in the nature of Mandamus directing the Respondent(s) for calling for records, thereby disclosing the details of the provisional attachment orders issued under section 110(5) of the Customs Act, 1962, and; (ii) For issuance of writ in the nature of Certiorari for quashing of the Provisional Attachment Orders placed on Petitioner's Bank Accounts maintained with Respondents No. 3 to 8, and; (iii) For issuance of a writ in the nature of Mandamus for commanding and directing Respondents No. 3 to 8: a. To unfreeze the ICICI Bank (Account No. 16690500167) freezed on 15.10.2025 maintained with Respondent No. 3, b. To unfreeze the ICICI Bank (Account No. 166905000336) freezed on 27.10.2025 maintained with Respondent No. 3, c. To unfreeze the RBL Bank (Account No. 409000538920) maintained with Respondent No. 4, d. To unfreeze the IDFC First Bank (Account No. 10110595384) maintained with Respondent No. 5, e. To unfreeze the Kotak Mahindra Bank (Account No. 291203917....
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....allenged. During pendency of the said writ petition, respondent no. 2 passed adjudication orders dated 18.10.2024 in respect of two show-cause notices issued to the exporters, imposing penalties of Rs. 50,00,000/- and Rs. 1,50,00,000/- respectively. The said amounts were appropriated from the petitioner's bank accounts which had been provisionally attached. On 29.10.2024, the Hon'ble Karnataka High Court was pleased to grant an interim stay of the provisional attachment orders but respondent no. 2 further debited amounts of Rs. 87,924.64/- and Rs. 82,00,000/- from the petitioner's bank accounts on 04.11.2024 and 14.11.2024 respectively. Against the adjudicatory orders, the petitioner has preferred statutory appeals before the Commissioner (Appeals), Patna on 16.12.2024, which are presently pending. The prayer of the petitioner before the Hon'ble Karnataka High Court seeking refund of the amounts illegally debited from its bank accounts did not work as the Hon'ble Karnataka High Court granted liberty to the petitioner to withdraw the writ petition and to approach the appropriate forum. 7. It is stated that after withdrawal of the writ petition filed by filed before the Hon'ble Ka....
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....g knowledge of the debit freeze imposed in the bank accounts in October 2025, multiple representations were made by the petitioner to the office of respondent no. 2 as well as to the Chief Commissioner, Customs, Patna vide emails followed by written representations, but for the first time, the respondent no. 2 responded vide communication dated 17.11.2025. The respondent no. 2 informed the petitioner that during the course of investigation relating to certain exporters, a purported trail of funds had been noticed in the petitioner's bank accounts. Thus, directions had been issued to respondent nos. 3 to 6 to attach the said accounts under Section 110(5) of the Customs Act. It was informed that defreezing was not possible due to the alleged ongoing investigation. 10. The submission of the petitioner is that the debit freeze orders were placed with the banks without any provisional attachment orders having been issued or communicated to the petitioner at that stage. It is stated that such orders were ultimately issued only on 07.01.2026, i.e. post facto in order to legitimize and cure the earlier arbitrary and unauthorized debit freezes imposed at the behest of respondent no. 2. ....
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....any specific reasons nor disclosed any tangible material linking the petitioner to the alleged fraudulent export activities. There is nothing to show that why attachment of the petitioner's bank accounts was necessary. 15. Learned counsel has relied upon the judgment of the Hon'ble Bombay High Court in the case of Commissioner of Customs (Import) vs. Gem Nuts and Produce Exports Co. P. Ltd. reported in (2010) 3 GSTR 618 : 2009 SCC OnLine Bom 1629 to submit that even though the expression "any person" under Section 142 of the Customs Act may appear wide, attachment or recovery from a non-defaulter recipient in impermissible unless it is established that such person had knowledge of the fraud or was holding the moneys on behalf of the defaulter. Reliance has been placed on paragraph '19' and '20' of the judgment in the case of Commissioner of Customs (Import) vs. Gem Nuts and Produce Exports Co. P. Ltd. (supra). 16. Learned counsel for the petitioner submits that the petitioner had been summoned in connection with the inquiry being conducted against M/s Kumar Enterprises and Kentil Technosoft Private Limited, who are said to be the alleged exporters, who had been involved in fr....
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....that pursuant to the said adjudication orders and in continuation of protective measures, directions were issued to various banks to transfer the attached amounts. As regards those adjudication orders, the appeals are pending before the Commissioner (Appeals), Patna. 20. It is stated that during the course of further independent investigation involving twelve other exporters, fresh evidence and financial trails emerged, once again linking the petitioner as a beneficiary of the proceeds of fraudulent exports. In the case of M/s Kumar Enterprises, it was found that an amount of Rs. 46,52,000/- was transferred to the petitioner. Based on the information received, necessary action was taken by issuing directions to the concerned bank, namely, Kotak Mahindra Bank, for fresh provisional attachment of bank accounts of the petitioner and for obtaining KYC documents and bank statements for further scrutiny. 21. It is stated that in the case of M/s Kentil Technosoft Private Limited, the investigation revealed a money trail exceeding Rs. 3 crore flowing into the accounts of the petitioner, thereby establishing a substantial and independent nexus of the petitioner with yet another set of....
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....hat it must contain reasons. (ii) The power to extend the provisional order of attachment not exceeding six months is to be exercised only after giving an opportunity of hearing to the party likely to be affected by such extension, hence the extension order must record reasons for doing so. 4. Learned counsel has relied upon the Instruction No. 19/2024-Customs dated 22nd July, 2024 issued by the Govt. of India in Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs (Investigation-Customs). Paragraph '8' thereof has been referred to. 5. It is submitted that in this case not only the order of provisional attachment has been issued at a belated stage, i.e., much after freezing the bank accounts/attaching the bank accounts of the petitioner, the provisional order of attachment are bereft of any reasons and further the extension of the same has been given without providing any opportunity of hearing. 6. We have called upon learned A.S.G., who is representing the Department of Customs, to answer the aforesaid issues. 7. As prayed, let this matter be listed on 9th of July, 2026 under the same heading m....
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....it. 4. It is crystal clear that attempt has been made to render the writ application infructuous. Taking advantage of the adjournment of the case to answer the issue, the respondent authority could not have tweaked the impugned order. This is not a fair play in action. This is also in breach of judicial discipline. The respondent authority exercising power of a statutory authority is acting as a quasi-judicial authority. Needless to say that the distinction between a judicial order and a quasi-judicial order is very thin and sometimes that distinction is also obliterating, therefore, the principles which are followed by the courts of law are equally binding upon the officers exercising quasi-judicial powers. This Court is not happy with the manner in which the authority has acted during pendency of the writ application. 5. We are not going into this issue further as learned ASG has immediately realized the situation. It is submitted by learned ASG that having understood the fact that this action could not have been taken during pendency of the writ application, he would not press the order dated 06.07.2026 passed by the authority. 6. Learned ASG submits a....
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....s restricted for the period specified in the detachment order itself. Further, it is clarified that the orders issued in the month of October, 2025 and Order issued on 07.01.2026, both are Provisional Attachment Orders operating on different Bank Accounts of the Petitioner and were issued in continuation of the ongoing investigation after satisfaction under Section 110(5). The chronology relied upon by the petitioner does not invalidate the statutory attachment". 28. Since Annexure 'A' to Annexure 'RA-2' provides the detail of the bank account, date of approval of the provisional attachment order by the Commissioner, the date of issue, the date of approval of the extension and date of extension, it would be apt to reproduce Annexure 'A' hereunder for a ready reference:- NAME OF THE BENEFICIARY ENTITY:- M/S NXTIFY TECHNOLOGIES (P) LTD. Name of the Fraudulent exporter Beneficiary Entity Bank A/c No. Date of approval of PAO by the Commissioner Date of issue of PAO Date of communication of PAO to M/s Nxtify Technologies Date of approval of the extension of PAO by the Commissioner Date of extension of PAO Date of communication of PAO extension or....
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.... Act, 1962 and not arbitrary. 30. In paragraph '41' of the counter affidavit, the respondents have taken stand that on the representation submitted by the petitioner, the petitioner was provided the reasons of such provisional attachments of bank accounts vide the office letter dated 17.11.2025. The office letter dated 17.11.2025 has been brought on record as Annexure 'R1-2'. We have perused Annexure 'R1-2'. On a bare reading of the Annexure 'R1-2', it appears that in this letter, an impression has been given that the direction to attach the bank accounts of the beneficiary i.e. the petitioner, is in terms of Section 110(5) of the Customs Act by the competent authority. 31. The respondents have themselves enclosed Annexure 'A', which we have extracted hereinabove. It is evident that the provisional attachment order dated 10.10.2025 in the matter of M/s Kentil Technosoft Private Limited and the order dated 23.10.2025 in the matter of M/s Kumar Enterprises were issued without approval of the competent authority i.e. the Commissioner. The respondents have admitted it. If it is so, the provisional attachment orders and the subsequent order of extension of these provisional attach....
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....g, provisionally attach any bank account for a period not exceeding six months: Provided that the Principal Commissioner of Customs or Commissioner of Customs may, for reasons to be recorded in writing, extend such period to a further period not exceeding six months and inform such extension of time to the person whose bank account is provisionally attached, before the expiry of the period so specified." 33. The Hon'ble Supreme Court has noticed the judgment of the Hon'ble Delhi High Court in the case of Proex Fashion (P) Ltd. vs. Union of India reported in 2021 SCC OnLine Del 2082 wherein the Hon'ble Delhi High Court has outlined the statutories stipulated conditions for the invocation of Section 83 of the SGST Act. Paragraph '10' of the judgment has been briefly taken note of in paragraph '35' of the judgment in case of Radha Krishan Industries (supra). It has been ultimately held that the power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well. An alternative remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an....
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.... 41.5. The provisional attachment which is contemplated is of any property including a bank account belonging to the taxable person. 41.6. The manner in which a provisional attachment is levied must be specified in the rules made pursuant to the provisions of the statute. 42. Under sub-section (2) of Section 83, a provisional attachment ceases to have effect upon the expiry of a period of one year of the order being passed under sub-section (1). The power to levy a provisional attachment has been entrusted to the Commissioner during the pendency of proceedings under Sections 62, 63, 64, 67, 73 or as the case may be, Section 74. Section 62 contains provisions for assessment for non-filing of returns. Section 63 provides for assessment of unregistered persons. Section 64 contains provisions for summary assessment. Section 67 elucidates provisions for inspection, search and seizure. 49. Now in this backdrop, it becomes necessary to emphasise that before the Commissioner can levy a provisional attachment, there must be a formation of "the opinion" and that it is necessary "so to do" for the purpose of protecting the interest of the government revenue....
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....so in order to protect interest of the government revenue. Necessity postulates that the interest of the Revenue can be protected only by a provisional attachment without which the interest of the Revenue would stand defeated. Necessity in other words postulates a more stringent requirement than a mere expediency. A provisional attachment under Section 83 is contemplated during the pendency of certain proceedings, meaning thereby that a final demand or liability is yet to be crystallised. An anticipatory attachment of this nature must strictly conform to the requirements, both substantive and procedural, embodied in the statute and the rules. The exercise of unguided discretion cannot be permissible because it will leave citizens and their legitimate business activities to the peril of arbitrary power. Each of these ingredients must be strictly applied before a provisional attachment on the property of an assessee can be levied. The Commissioner must be alive to the fact that such provisions are not intended to authorise Commissioners to make pre-emptive strikes on the property of the assessee, merely because property is available for being attached. There must be a valid formation....
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.... (ii) Such an order can be passed during any proceedings under the Customs Act ; (iii) Before passing such an order the proper officer must form an opinion that such attachment of bank account is necessary for the purposes of protecting the interest of revenue or for preventing smuggling ; (iv) Before passing such an order the proper officer must obtain prior approval of the Principal Commissioner of Customs or of Commissioner of Customs ; and (v) Such provisional attachment shall be for a period not exceeding six months. 32. As per the proviso the Principal Commissioner of Customs or Commissioner of Customs can extend such provisional attachment for a further period not exceeding six months ; but he must record reasons for such extension and such extension of period has to be informed to the person whose bank account is provisionally attached before expiry of the period so specified." 37. In case of Chokshi Arvind Jewellers (supra), the Hon'ble Bombay High Court has discussed sub-section (5) of Section 110 of the Customs Act in paragraph '36' to '42' as under:- "36. On a bare perusal of the provisions of section 110(5) of the Act, ....
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....igorous scrutiny of the Principal Commissioner or the Commissioner. Each of these components of section 110(5) are integral to a valid exercise of power. In other words, when the exercise of power is challenged, the validity of its exercise will depend on a strict and punctilious observance of the statutory pre-conditions by the Principal Commissioner of the Commissioner. While conditioning the exercise of power on the formation of an opinion of the Principal Commissioner/Commissioner that, "for the purpose of protecting the interest of revenue or preventing smuggling it is necessary so to do", it is evident that the statute has not left formation of the opinion to an unguided subjective discretion of the proper officer or for that matter the Principal Commissioner/Commissioner. The formation of the opinion must bear a proximate and live nexus to the purpose of protecting the interest of Government Revenue and/or preventing smuggling. 40. Further, such provisional attachment is contemplated during the pendency of certain proceedings, meaning thereby that a final demand or liability is yet to be crystallised. Therefore, an anticipatory attachment of this nature must strictl....
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.... issued without approval of the same by the Commissioner. Thus, this Court would, therefore quash and cancel the provisional attachment orders which were issued without obtaining approval of the Commissioner and the subsequent extension of those orders. Those are hereby quashed. 39. As regards the (i) ICICI Bank Account No. 16690500336, (ii) RBL Bank Account No. 409000538920 and (iii) IDFC First Bank Account No. 10110595384, it is stated that these accounts were put on debit freeze in October, 2025. The respondents have not denied this fact but they have stated in the supplementary counter affidavit that the petitioner has deliberately misconstrued the fact of debit freeze and provisional attachments. It is the respondents' clarification that the orders issued in the month of October 2025 and the order issued on 07.01.2026 both are provisional attachment orders. If it is so, it was incumbent upon the respondents to place on record to say in positive words that the orders issued in the month of October 2025 had the approval of the Commissioner. No such statement has been made by the respondents. Save and except to say that the order issued in the month of October 2025 and the ord....
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....ion 110 of the Customs Act, 1962, as follows. Section 110. Seizure of goods, documents and things (5) Where the proper officer, during any proceedings under the Act, is of the opinion that for the purposes of protecting the interest of revenue or preventing smuggling, it is necessary so to do, he may, with the approval of the Principal Commissioner of Customs or Commissioner of Customs, by order in writing, provisionally attach any bank account for a period not exceeding six months: PROVIDED that the Principal Commissioner of Customs or Commissioner of Customs may, for reasons to be recorded in writing, extend such period to a further period not exceeding six months and inform such extension of time to the person whose bank account is provisionally attached, before the expiry of the period so specified. 2. I, therefore, being the proper officer under the powers bestowed upon me by the Commissioner of Customs, order for provisional attachment of below mentioned account with immediate effect and till further orders. 3. Further, you are hereby requested to furnish the bank Statement of the accounts listed below for the period 01.04.2022 to ....
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....hall lose its sanctity unless it is extended before the expiry of the period of six months, in accordance with law. One of the extension order placed on the record is being reproduced hereunder:- "भारत सरकार सीमा शुल्क (निवारण) आयुक्तालय पंचम मंजिल केंद्रीय राजस्व भवन वीरचंद पटेल पथ पटना-800001 दूरभाष-सह-दुरचित्रक 0612-2504998:: [email protected], [email protected] 30-04-2026 To, The Branch Manager, ICIC Bank, Patna Branch Subject:- Extension of the period of Provisional attachment of the Bank accounts of fraudulent exporters- reg. Plea....