(1) The power exercised by the proper officer under Section 110(5) of the Customs Act, 1962 in directing provisional attachment of the bank account of a person is quite drastic or coercive in nature resulting in attracting civil consequences. If a bank account of a person is attached, it would certainly cause severe prejudice to that person. The Legislature, whilst enacting the provisions of Section 110(5) of the Act was conscious of the severity of such power and the serious consequences which would emanate from the provisional attachment of any property, including a bank account, of a taxable person, and, therefore, it conditioned the exercise of the power by employing specific statutory language of an approval to be sought by the proper officer from the Principal Commissioner or Commissioner, who is a high ranking officer. Thus, such power is not left to the ipse dixit of the proper officer and any such decision is required to undergo a rigorous scrutiny of the Principal Commissioner or the Commissioner.

(2) On facts, the provisional attachment was bad in law, as no order attaching the Petitioners’ bank accounts had been passed by Commissioner of Customs (Preventive). Said order was necessary in view of the judgment of the Bombay High Court in the case of Boxster Impex Pvt.Ltd. vs. Union of India 2021(44) G.S.T.L. 138 (Bom)

(3) Section 110(5) clearly deals with a situation where an opinion has to be formed on the basis of material on record. The use of the word “may” in Section 110(5) of the Act indicated not only the discretion, but an obligation to consider that there is a necessity to pass an order with reasons to be recorded in writing for provisionally attaching the bank account in order to protect the interests of the Government Revenue. In the present case, the Petitioners’ bank account have been illegally sealed and frozen without following the procedure provided by Section 110(5) of the Act. In Radha Krishan Industries vs. State of Himachal Pradesh & Ors 2021(4) TMI 837, the Supreme Court held that the power to order a provisional attachment of the property of a taxable person, including a bank account, is draconian in nature and the conditions which are prescribed by the statute for a valid exercise of that power must be strictly fulfilled.

(4) The exercise of the power for ordering a provisional attachment must be preceded by the formation of an opinion by the Commissioner that it is necessary so to do for the purpose of protecting the interest of the government revenue. In Radha Krishan Industries (Supra), the Supreme Court had further observed that, before ordering provisional attachment, the Commissioner must form an opinion on the basis of tangible material that the assessee is likely to defeat the demand, if any, and that therefore it is necessary to order provisional attachment for the purpose of protecting the interest of the government revenue.