The Rajasthan High Court quashed the order freezing the bank account of the petitioner for more than 1 year.
The investigation had been initiated against the petitioner, M/s Padmavati Industries, and was being carried out under the provisions of the Central Goods and Service Tax Act, 2007.
However, the freezing of the bank account of the petitioner was undertaken by the Deputy Commissioner (Customs) under the provisions of the Customs Act, 1962.
The petitioner submitted that no power to issue orders for freezing of bank accounts was available under the Customs Act, 1962 and the said power had only been introduced by way of amendment to Section 110(5) inserted by the Finance (No.2) Act, 2019, dated August 1, 2019.
The petitioner further contended that the power to freeze the bank account had only been granted to the Commissioner of Customs for a period not exceeding six months with the maximum cap of one year.
The court noted that investigation under the Central Goods and Service Tax Act is pending against the petitioner company. However, the impugned order has been passed by the Deputy Commissioner of Customs (Preventive), in view of the investigation initiated against the petitioner company by Anti Evasion Wing of Central Goods and Service Tax, Commissionerate, Jaipur. Through the impugned order, the bank account of the petitioner company was frozen.
The court further observed that the impugned order was passed before the amendment in Section 110(5) of the Customs Act, 1962 had come into operation. Moreover, as per the amendment also, the account cannot be frozen beyond the period of one year.
The division judge bench of Justice Chandra Kumar Songara and Justice Sabina quashed the order passed by the Deputy Commissioner of Customs (Preventive) and held that the account cannot be frozen beyond the period of one year.
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