Unity Traders Vs Principal Additional Director (Delhi High Court)
The Delhi High Court has ordered the immediate unfreezing of multiple bank accounts belonging to Unity Traders, a petitioner who challenged a debit freeze imposed by tax authorities. The case, heard under Articles 226 and 227 of the Constitution of India, involved a challenge to a communication dated June 16, 2024, from the Directorate of General GST Intelligence (DGGI), which led to the freezing of the company’s bank accounts.
During the hearing, the court was informed that Unity Traders had already filed an appeal under Section 107 of the Central Goods and Services Tax Act, 2017, against the initial tax order dated January 28, 2025. The court noted that filing this appeal automatically stayed the final order.
In its ruling, the High Court directed Kotak Mahindra Bank to unfreeze all three of the company’s accounts with immediate effect. The court also instructed the tax department to issue a formal communication to the bank confirming the lifting of the debit freeze. This decision highlights the legal principle that a statutory appeal under Section 107 of the CGST Act grants an automatic stay, thereby rendering any subsequent freezing orders without a legal basis. The petition was disposed of with these directions.
