Bombay High Court
SKY TOUCH AVIATION PVT LTDversusUNION OF INDIA
- Decided
- Disposal
- DISPOSED OFF
Holding
The continued debit freeze beyond the statutory period of one year is impermissible, and the respondents must defreeze the petitioner’s bank account.
Summary
The Bombay High Court heard two writ petitions filed under Article 226 seeking the defreezing of a bank account of Sky Touch Aviation Pvt. Ltd. and its director, which had been placed under debit freeze on 26 May 2020 by the Commissioner of Customs during an investigation into alleged over‑valuation of exports. The investigation culminated in a show‑cause notice and an order confirming penalties, after which the petitioner filed an appeal before CESTAT and made a statutory pre‑deposit of 7.5% under Section 129E of the Customs Act. Despite the conclusion of the investigation, the freeze remained for over a year, and the petitioner’s repeated representations for defreezing were ignored. The Court examined Section 110(5) of the Customs Act, which permits provisional attachment for a maximum of six months, extendable only once for another six months with recorded reasons. Finding that the statutory period of one year had elapsed and no valid extension was recorded, the Court held the continued freeze to be impermissible and a violation of the petitioner’s rights. Accordingly, the writ petitions were allowed and the respondents were directed to defreeze the bank account.
Issues considered
- The legality of continuing a debit freeze beyond the six‑month period and its possible extension under Section 110(5) of the Customs Act, 1962.
- Whether the petitioner is entitled to defreeze the bank account after the investigation and show‑cause proceedings have concluded and an appeal has been filed with the requisite pre‑deposit.
- Whether the continued freeze violates the petitioner’s constitutional right to practice any profession, trade or business under Article 19(1)(g) of the Constitution of India.
Legislation cited
- Customs Act, 1962 — s. 110(5)
Subjects
- debit freeze
- Customs Act
- Section 110(5)
- Article 226
- High Court
- bank account defreeze
- export drawback
- IGIGST
- ROSCTL
- pre‑deposit
- constitutional right to trade
Judgment
902-wp 449-26.doc
ARJUN IN THE HIGH COURT OF JUDICATURE AT BOMBAY
MACHHINDRA ORDINARY ORIGINAL CIVIL JURISDICTION
KADAM
Digitally signed by WRIT PETITION NO. 449 OF 2026
ARJUN
MACHHINDRA
KADAM
Date: 2026.08.29 M/s. Sky Touch Aviation Pvt. Ltd.
17:37:11 +0530
306, Rangoli Building, Near Air Cargo Complex,
Sahar, Mumbai – 400 009. …Petitioner
Versus
1. Union of India
Through its Joint Secretary,
Ministry of Finance, Department of Revenue,
North Block, New Delhi – 110 001.
2. Commissioner of Customs-IV (Export),
Air Cargo Complex, Sahar, Andheri (E),
Mumbai – 400 099. .. Respondents
.
WITH
WRIT PETITION NO. 539 OF 2026
Adesh V. Saple
Age-38 years, Occ.-Business,
Director,
M/s. Sky Touch Aviation Pvt. Ltd.
306, Rangoli Building, Near Air Cargo Complex,
Sahar, Mumbai – 400 009. …Petitioner
Versus
1. Union of India
Through its Joint Secretary,
Ministry of Finance, Department of Revenue,
North Block, New Delhi – 110 001.
2. Commissioner of Customs-IV (Export),
Air Cargo Complex, Sahar, Andheri (E),
Mumbai – 400 099. .. Respondents
.
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__________________________
Mr. Ashok Singh for the Petitioners.
Mr. Karan Adik a/w. Ms. Mamta Omle for the Respondents in WP
539/26.
Mr. Ram Ochani a/w. Ms. Sangeeta Yadav for the Respondents in WP
449/26.
__________________________
CORAM : M. S. KARNIK AND
SANDESH D. PATIL, JJ.
DATED : 28th AUGUST, 2026.
ORDER (PER M. S. KARNIK, J.)
1. The petitions are disposed of by a common order as common
issues are involved. The petitioner in Writ Petition No. 449 of 2026
is a company of which the petitioner in Writ Petition No. 539 of 2026
is the director. In respect of the same transaction, the bank accounts
of the petitioners are debit freezed. The personal account of the
petitioner-Adesh V. Saple in Writ Petition No. 539 of 2026 was debit
freezed sometime in 2020 whereas the account of the petitioner-
company in Writ Petition No. 449 of 2026 was debit freezed on 26 th
May, 2020.
2. We refer to the facts in Writ Petition No. 449 of 2026 for
convenience. By this petition filed under Article 226 of the
Constitution of India, the petitioner seeks a direction to respondent
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Nos.1 and 2 to defreeze the petitioner’s bank account maintained
with Kotak Mahindra Bank, Mumbai.
3. Facts briefly stated are as follows:-
Respondent No.2-Commissioner of Customs had initiated an
investigation into alleged over-valuation/mis-declaration by a third
party- M/s. Prince Enterprises, in respect of export of Men’s Trousers
of Cotton MMF and Handwork Embroidered Dress Patterns of MMFs,
undertaken with a view to avail ineligible drawback, Integrated
Goods and Services Tax (‘IGST’ for short) and Rebate of State and
Central Taxes and Levies (‘ROSCTL’ for short). In the course of said
investigation, the petitioner’s bank account came to be placed under
debit freeze on 26th May, 2020.
4. Pursuant to the investigation, respondent No.2 issued a show
cause notice dated 25th March, 2021 proposing rejection and
redetermination of export value and demand of various benefits
availed, together with proposed penalty against M/s. Prince
Enterprises as well as the petitioner. The petitioner filed reply to the
show cause notice on 30th November, 2021. The show cause notice
came to be adjudicated in the Order-in-Original dated 29 th December,
2021 confirming penalty against the petitioner and various demands
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against M/s. Prince Enterprises.
5. The petitioner thereafter preferred the appeal against the said
Order-in-Original before the Customs, Excise and Service Tax
Appellate Tribunal (‘CESTAT’ for short) upon making the statutory
pre-deposit of 7.5% in terms fo Section 129E of the Customs Act,
1962. The petitioner says that the said appeal is pending. The
petitioner also says that it had approached the CESTAT by way of an
application for defreezing of the account, which came to be rejected
on the ground that the Tribunal did not have jurisdiction to entertain
the same.
6. It is the petitioner’s case that despite conclusion of the
investigation, issuance and adjudication of the show cause notice,
now that even an appeal has been filed along with payment of the
statutory pre-deposit, respondent No.2 has failed and neglected to
defreeze the said bank account. The petitioner addressed
representations dated 2nd March, 2021 and 27th July, 2021 and a
further representation dated 31st October, 2023 to respondent No.2,
requesting defreezing of the account on the ground that the
continued freeze was hampering the day-to-day operation of its
business. The representations are not responded by the respondents.
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7. Learned counsel for the petitioner submitted that the credit
balance presently lying in the said account is Rs.9,07,214/-, of which
all but Rs.25,573/- was received after the account came to be frozen
on 26th May, 2020 and represents, inter alia, an Income Tax refund of
Rs.6,06,150/- credited on 27th May, 2020 and freight booking
receipts from the petitioner’s clients aggregating Rs.2,75,491/-,
received between May, 2020 and May, 2021 in the ordinary course of
the petitioner’s business.
8. It is the submissions of learned counsel for the petitioner that
once the investigation has concluded and even the show cause notice
has been adjudicated, there is no justification for the respondents to
continue the debit freeze over the petitioner’s account. It is
submitted that the continued freeze, without any order of extension
or justification, and without response to the petitioner’s repeated
representations, is arbitrary, contrary to the scheme of the Customs
Act, 1962, and violative of the petitioner’s rights under Article 19(1)
(g) of the Constitution of India.
9. We have heard learned counsel for the petitioner. Learned
counsel for the respondents argued in support of the debit freeze. It
is submitted that the facts of the present case do not justify
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defreezing of the account.
10. In the present case, there is no dispute that the account of the
petitioner was placed under debit freeze on 26th May, 2020. This was
in view of the investigation that was pending. During any
proceedings under the Act, the power to debit freeze is provided in
Section 110 (5) of the Customs Act, 1962, which reads thus:-
110(5). Where the proper officer, during any
proceedings under the Act, is of the opinion that for the
purposes of protecting the interest of revenue or
preventing smuggling, it is necessary so to do, he may,
with the approval of the Principal Commissioner of
Customs or Commissioner of Customs, by order in writing
provisionally attach any bank account for a period not
exceeding six months.
PROVIDED that the Principal Commissioner of
Customs or Commissioner of Customs may, for reasons to
be recorded in writing, extend such period to a further
period not exceeding six months and inform such
extension of time to the person whose bank account is
provisionally attached, before the expiry of the period so
specified.
11. In the present case, it is pertinent to note that the debit freeze
was on account of an on going investigation. The investigation is
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over, culminating into issuance of show cause notice dated 23 rd
March, 2021. The show cause notice has been adjudicated. An
appeal has been filed against the Order-in-Original dated 29 th
December, 2021 by the petitioner. The mandatory pre-deposit of
7.5% has been made. Section 110(5) of the Customs Act provides
the provisional attachment of the bank account for a period not
exceeding of six months by the proper officer with the approval of
Principal Commissioner of Customs or Commissioner of Customs.
The proviso to Section 110(5) says that this period can be extended
to a further period not exceeding six months for the reasons to be
recorded in writing.
12. Looked at from any angle, it is clear that so far as the petitioner
is concerned, the period of one year from the debit freeze of the bank
account of the petitioner is already over. In such view of the matter,
the continuation of the debit freeze is impermissible. There is
nothing on record nor any provision of law is placed for our
consideration justifying the continuance after the period of one year
since the debit freeze is over or upon the conclusion of the
investigation. On this ground itself, the petition deserves to be
allowed.
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13. In any case, the petitioner having filed an appeal against the
Order-in-Original where the amount of 7.5% pre-deposit has been
paid, continuance of the debit freeze in such circumstances would be
coercive in nature not having the sanction of law. The Writ Petitions
are therefore allowed in terms of prayer clause (a).
14. The petition is disposed of. No costs.
(SANDESH D. PATIL, J.) (M. S. KARNIK, J.)
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