Unity Traders Vs Principal Additional Director General, DGGI
Date: May 27, 2025
Subject Matter
Bank Account Freezing Illegal After An Appeal Is Filed u/s 107
Summary
M/s Unity Traders filed a petition challenging the freezing of their bank accounts based on a communication from the Directorate General of GST Intelligence (DGGI) dated June 16, 2024. The freezing was a consequence of an Order-in-Original dated January 28, 2025. The petitioner's counsel informed the court that an appeal against this order had been filed under Section 107 of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017).
The department's counsel confirmed that one of the petitioner's bank accounts had already been restored. However, the petitioner's grievance remained as two other accounts, linked to the same PAN, were still frozen.
The court noted that once an appeal is filed against an Order-in-Original, the order is automatically stayed. The freezing of the bank accounts was directly linked to the stayed order. Therefore, the freezing of all the accounts was deemed to be without legal basis.
The court directed Kotak Mahindra Bank to de-freeze all three of the petitioner's bank accounts with immediate effect. The GST Department was also directed to issue a formal communication to the bank to lift the debit freeze. The petition was disposed of with these directions.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. This hearing has been done through hybrid mode.
2. The present petition has been filed by the Petitioner – M/s Unity Traders under Articles 226 and 227 of the Constitution of India challenging the freezing of the bank accounts of the Petitioner vide communication dated 16th June, 2024.
3. On the last date of hearing i.e., 26th May, 2025, the Court was informed that an appeal has been filed against the impugned Order-in-Original dated 28th January, 2025. In view thereof, ld. Sr. Standing Counsel (‘SSC’) for the Respondent was directed to seek instructions.
4. Today, Mr. Tyagi, ld. SSC has sought instructions and submits that vide communication dated 27th May, 2025, the account number 5046084137 has been restored and freezing orders have been lifted.
5. However, the grievance of the Petitioner is that two more accounts have been opened on the same PAN number and in view of the communication dated 16th June, 2024, even the said bank accounts have also been frozen by the Bank.
6. A perusal of the record would reveal that in the communication dated 16th June, 2024 by the Directorate of General GST Intelligence (hereinafter ‘DGGI’), it states as under.
7. Pursuant thereto the Petitioner is stated to have received a letter from the Kotak Mahindra Bank that the following three accounts of the Petitioner and its proprietor have been frozen and debit freeze has been imposed.
8. In view of the fact that the appeal in respect of the impugned Order-in-Original has already been filed in terms of Section 107 of Central Goods and Services Tax Act, 2017, the final order dated 28th January, 2025 is automatically stayed. Therefore Kotak Mahindra Bank is directed to de-freeze all three accounts with immediate effect. The Department shall also issue a communication to the Kotak Mahindra Bank calling upon them to lift the debit freeze.
9. The petition is disposed of in these terms. Pending applications, if any, are also disposed of.