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Balaji Enterprises, Tatvik Exports & Ors. Versus Union of India & Ors.

2017 (10) TMI 577 - DELHI HIGH COURT

Freezing of Bank Account of petitioner - non-issuance of SCN - Held that: - Without there being any authority in law to justify the freezing of the bank accounts, requiring the Petitioners to furnish security for de-freezing such bank accounts would be unjustified. It is always open to the DRI to conclude the investigation and issue a SCN in accordance with law. Statutory authorities have to exercise their powers strictly according to the Act under which they function - the Court directs that th .....

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titions concerns the actions of the Respondent No. 2 - Directorate of Revenue Intelligence ( DRI ) in freezing the bank accounts of the Petitioners pending issuance of a Show Cause Notice ( SCN ). 2. In W.P.(C) 3793/2017 filed by Balaji Enterprises, it is pointed out that on 27th September 2016, the premises of the Petitioner was searched by the DRI officers and certain documents, two cell phones and one laptop were seized. 3. On 17th October 2016, the Deputy Director, DRI, Noida wrote to HDFC B .....

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Petitioner was constrained to approach the Court since the freezing of the above-mentioned bank account has continued since then without any SCN being issued to the Petitioner. Simultaneously, summons have also been issued periodically to the Petitioner, wherein directions were issued for personal appearance and submission of documents. A request was made by the Petitioner on 26th April 2017 seeking defreezing of the bank accounts which has not been acceded to by the DRI. 5. As far as the Petiti .....

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The freezing of the bank account has continued since then. Likewise the Bank A/c No. 001687300000672 of the Petitioner No.2, with Yes Bank, South Extension, Part-II Branch, New Delhi and Bank Account No. 061201601001514 of Petitioner No.3 with Corporation Bank, Civil Lines, Moradabad stood frozen. 6. The Petitioners state that pursuant to the summons issued to each of them, they have been appearing before the DRI and providing information and documents. However, till date no SCN has been issued .....

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ply, para 7 (C) and (D) states as under: C. The transactions from bank account were ordered to be stopped on the basis of finding of search which indicated that the said accounts were being used to route the money through various entities and ultimate withdrawal in cash by these accounts or other accounts operated by the petitioners and their accompanies. D. Transactions from bank account were ordered to be stopped with the purpose to safeguard the Drawback money available in the said accounts a .....

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are either proprietor or partner. Therefore, it is evident that the money from accounts of petitioner firm have been ultimately routed to Shri Shray Kumar and Shri Pawan Arora. 9. As far as W.P.(C) 3793/2017 is concerned similar explanation is offered in the para-wise reply in para 7 (C) and (D). Significantly, in both the replies in the para-wise replies it is stated in para 7 H that, No proceeding under Section 110 of the Customs Act, 1962 was undertaken as there was no stock of any goods with .....

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has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods: Provided that where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer. (2) xx xx xx xx xx (3) The proper officer may seize any documents or things which, in his opinion, will be useful for, or relevant to, any pr .....

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an Overseas v. Union of India 2010 (252) ELT 512 (Del) where a similar freezing of bank account has been held to be illegal. The decision of this Court in Laxman Overseas v. Union of India (supra) has been followed in Multitek Engineers v. Union of India 2013 (287) ELT 44 (Kar) where the bank accounts were asked to be defrozen. 13. Learned counsel for the Respondents has referred to another decision dated 16th March, 2017 passed in W.P.(C) No.12251/2016 (Lal Mahal Ltd. v. Union of India) where w .....

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ld be unjustified. It is always open to the DRI to conclude the investigation and issue a SCN in accordance with law. Statutory authorities have to exercise their powers strictly according to the Act under which they function. In Khaja Mustafa Kamal v. Union of India (supra), in similar circumstances, it was observed as under: 19 Once there are allegations of fraud the Revenue has a larger responsibility and duly to the public. It cannot refuse to take all steps and rest only on freezing of bank .....

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