Customs Act, 1962 – Section 110(5) – Provisional attachment of bank accounts – Each of the essential requirements to be complied with by the Customs and to pass written order and serve on the bank account holder.

Customs had conducted search operation in the office premises of the petitioners.  Various summonses were issued.  All the requisite documents were submitted to the Customs authority.

However, the Kotak Mahindra Bank and Bank of Baroda informed the petitioner that the Customs through its notice instructed the Banks to provisionally attach the bank accounts under Section 110(5) of the Customs Act, 1962.   Similar facts and actions in connected writ petitions.

HELD that the power to attach bank account is quite drastic or coercive resulting in civil consequences.  Serious consequences emanating from such attachment would show severity of such power.   A bank account can be provisionally attached if proper forms an opinion that it is necessary to do so to protect the interest of revenue or preventing smuggling.  It is, therefore, necessary to form the opinion based on tangible material available with the proper Officer and the necessity to attach bank account has to be for protecting revenue interest or prevent smuggling.   This power cannot be exercised for any other purpose.   The order of bank account attachment must show the reasons for forming opinion and basis for such opinion.   Each of the essential ingredients must be strictly complied before provisional attachment. Moreover, the order has to be served on the holder of bank account.  However, in this case, no such order was passed.  On the contrary, the Customs had contended that no such written order is required.  This would virtually make mockery of Section 110(5) of the Act.

Judgment dated 12.3.2024 in Writ Petition (L) No.2633 of 2024 of Chokshi Arvind Jewellers Vs. Union of India and others with con