TMI Blog2023 (5) TMI 1230X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 122(1A) of the CGST Act, if in the opinion of the Commissioner it is necessary to do so for the purpose of protecting the interest of government revenue. Thus, the bank accounts of ZIPL cannot be attached for securing the revenue of another taxable person. It is implicit that the bank accounts and assets of only those taxable person or persons specified in Section 122(1A) of the CGST Act can be attached who may be liable for payment of any government revenue and the Commissioner is of the opinion that it is necessary to attach their assets in the interest of government revenue. A debt owed by any person to the taxable person, whose assets or bank accounts are liable to be attached under Section 83 of the CGST Act, can be attached being an asset of such a person. But the bank account of the person owing such debt cannot be subject to a provisional attachment order under Section 83 of the CGST Act. This Court considers it apposite to dispose of the present petition by setting aside the impugned orders attaching ZIPL s bank accounts albeit with the further direction that ZIPL shall make payments due to various merchants directly in their respective bank accounts as disclosed by ZI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ZIPL also claims that it has complied with the Know Your Customer (KYC) requirements in respect of the merchants using its platform but has no control over their activities in relation to the supply of goods and services, which may be chargeable to GST. ZIPL charges a transaction fee and claims that it has duly discharged the GST on the amounts charged from merchants for use of its online payment platform. 7. ZIPL states that the payments are received in the Escrow / Nodal accounts, which are maintained in terms of the guidelines issued by the Reserve Bank of India (hereafter RBI ). ZIPL is entitled to only part of the payments under the Escrow / Nodal accounts and the balance amounts are required to be paid to the merchants and suppliers who have used the services of ZIPL for facilitating receipt of payments from their customers. 8. Undisputedly, the attachment of ZIPL s Escrow / Nodal account would result in effectively shutting down its business as it would no longer be able to operate the online platform. Factual Context 9. A search was conducted on the premises of ZIPL as well as it Directors on 06.10.2022 and 07.10.2022. As noted above, the impugned orders attaching ZIPL s b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts whose bank accounts had been provisionally attached. He accordingly allowed release of the said amount, subject to the condition that the amounts be paid to the said merchants directly in the bank accounts as mentioned in the said impugned order, that is, the accounts that had already been attached by the respondents. 15. In addition, respondent no. 1 directed that before transfer of the said amount, ZIPL and Yes Bank Ltd. would submit an affidavit to the Deputy Director of DGGI to the effect that branches of the banks maintaining the accounts of the recipients are informed that the bank account of the concerned payee is attached and the same is acknowledged by the concerned banks. It was further directed that in case ZIPL and Yes Bank Ltd. are not willing to inform the recipient banks, they shall inform the same to the Deputy Director of DGGI, who would then issue a NOC after informing the banks. 16. Insofar as the balance amount of ₹92.29 crores is concerned (₹244.54 crores - ₹152.25 crores), respondent no. 1 noted that it pertained to 18 other merchants, some of which were found to be non-existent, and bank accounts of some of the merchants were attached but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one year. It is also alleged that certain contraventions of Foreign Exchange Management Act, 1999 (FEMA) were observed and the RBI has issued a compounding order on 24.06.2022. It was also alleged that ZIPL was operating the Nodal / Escrow accounts and providing payment aggregator / payment gateway services in violation of regulatory requirements stipulated by the RBI. 19. The scope of the present proceedings is confined to determining whether the impugned orders are in accordance with Section 83 of the CGST Act. Thus, we are not required to examine the action taken by the RBI. Obviously, ZIPL will have to comply with the directions issued by the RBI, unless the same are set aside by a competent court or authority. But the directions issued by the RBI is not the subject matter of the present petition. 20. Mr. Harpreet Singh, learned counsel appearing for the respondents, had submitted that the investigation is underway and that ZIPL s bank accounts had been attached in view of the information that some of the merchants onboarded on ZIPL s platform were non-existent. He also submitted that it was also suspected that money was being paid to fake and non-existent merchants operated b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to attach their assets in the interest of government revenue. A debt owed by any person to the taxable person, whose assets or bank accounts are liable to be attached under Section 83 of the CGST Act, can be attached being an asset of such a person. But the bank account of the person owing such debt cannot be subject to a provisional attachment order under Section 83 of the CGST Act. 25. We are also unable to find any basis for the various directions issued by respondent no. 1 in the impugned order dated 01.02.2023 requiring ZIPL to obtain NOCs or acknowledgments from the bank accounts of the recipient merchants. 26. Mr. Tarun Gulati, learned senior counsel appearing for ZIPL, submitted that ZIPL had no issue in accepting the respondents condition that the payments to various merchants be made only in the specified bank accounts as communicated to the respondents and as noted in the impugned order dated 01.02.2023. He also states that ZIPL has no cavil in undertaking that the amounts payable to the merchants and as recorded in the impugned order dated 01.02.2023 will be paid without holding back any amount. 27. Mr. Harpreet Singh fairly states that, at this stage, attachment of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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