Nowadays, every financial transaction is closely monitored not only by the Income Tax Department but also by the Goods and Services Tax (GST) Department. The GST Department has the authority to freeze taxpayers’ bank accounts in cases of fraudulently claiming input tax credit (ITC), tax evasion, or issuing bills without supplies. To protect government revenue, the department can temporarily seize a GST-registered taxpayer’s bank account under certain circumstances.
According to GST rules, the GST Department is authorized to freeze taxpayers’ bank accounts in the following six serious situations:
- Failure to pay GST to the government on time.
- Fraudulently claiming input tax credit (ITC).
- Fake forms or sales companies were discovered during a departmental investigation.
- Irregularities were discovered during a departmental audit conducted by the GST Department.
- Issuing bills without actually supplying goods.
- Not cooperating with the taxpayer during a departmental investigation.
In such serious circumstances, the GST Commissioner has the powerful authority to temporarily freeze a taxpayer’s bank account.
Take these decisive steps immediately if your bank account is frozen
As soon as you learn that your account has been frozen, you must take some decisive steps without delay. Timely action can help your account be unfrozen quickly:
Immediately file a DRC-22A complaint
Upon receiving notice of your account being frozen, you must immediately file a complaint through the DRC-22A form. You must complete this task within 7 days.
Correct Irregularities and Submit Documents
You must prove that you have not committed any irregularities or that the irregularities found have been rectified. To do this, you must submit all the necessary documents to the Commissioner’s office.
Open an Account Using a Bank Guarantee
If you request the Commissioner to unfreeze your account and the Commissioner agrees, the account can also be reopened by providing a bank guarantee as security. This may be a compromise route.
Contact Senior Officials
If your account is not opened despite all these administrative efforts, you can complain about the matter to senior officials of the GST Department.
Writ Petition in the High Court: The Last Resort
As a last resort, when all other avenues are exhausted, you can file a writ petition in the High Court. This legal path is suitable for a judicial remedy.