Release of Frozen Assets: Karamjit Jaiswal vs. Commissioner of Central Taxes (GST)
In the case of Karamjit Jaiswal versus the Commissioner of Central Taxes (GST), we delve into a scenario where the tax department froze the immovable properties and bank accounts of Mr. Karamjit Jaiswal. This legal battle revolves around the duration of such freezing actions and the rights of the individual affected.
On November 27, 2020, the tax department attached the immovable properties and bank accounts of Karamjit Jaiswal. Seeking relief from this financial freeze, Mr. Jaiswal filed a writ petition with the High Court, requesting the tax department to unfreeze his accounts.
The primary issue at hand is whether a provisional attachment order by the tax department remains valid beyond one year.
Mr. Karamjit Jaiswal’s argument is rooted in the fact that his bank account and immovable properties were attached during an inquiry into M/s Milkfood Ltd., of which he holds a 34.79% share. However, he is neither a director nor an authorized signatory of the company, nor is he involved in its day-to-day decision-making. He also points out that Ahe is not a registered or taxable person under Section 2(107) of the CGST Act 2017. Moreover, a previous order had already quashed the provisional attachment of his daughter’s bank account on May 15, 2021. According to Section 83(1) of the CGST Act, the provisional order ceases to have effect after one year, and as of November 21, 2021, no fresh attachment orders were issued.
The Tax Department’s Response:
The tax department acknowledged receipt of Mr. Jaiswal’s notice and stated that they had not renewed the disputed attachment order or issued any new attachment orders. However, they had issued a show-cause notice to Mr. Jaiswal under Section 74 of the CGST Act.
Observation and Judgment:
The Court carefully considered the provisions of Section 83(1) of the CGST Act, which state that provisional orders lose their effect after one year. Since no fresh attachment orders were issued following the initial order, the court directed the tax department to release Mr. Jaiswal’s immovable properties and unfreeze his accounts within three days of the order’s uploading. Consequently, the writ petition and pending application were disposed of.
Mr. Karamjit Jaiswal’s association with M/s Milkfood Ltd. is as a shareholder, with no direct involvement in the company’s operations. The tax department’s actions of freezing his personal accounts and attaching his immovable property were deemed inappropriate. The High Court provided Mr. Jaiswal with a platform to address his grievances and, in accordance with the law, ordered the release of his assets. This case underscores the significance of adhering to legal timelines and respecting the rights of individuals, even in matters related to taxation and finance, regardless of one’s background.