The Calcutta High Court set aside the attachment order since the cash credit account is not a debt and cannot be made attachable.
J. L. Enterprises, the petitioner is a partnership firm. On 4th March 2023, State Tax Department Officers visited the registered office of the said firm and inspected the books on accounts and verified records under Section 67 of the West Bengal WBGST Act and issued the INS-01 form.
A show cause notice in DRC-014, the respondent issued a notice to the banker of the petitioner’s firm to provisionally attach the cash-credit facility of the said firm. Challenging the said order of provisional attachment, the petitioner has approached this Court under Article 226 of the Constitution of India.
It was submitted by the advocate for the petitioner referring to a decision in the case of Jugal Kishore Das Vs. Union of India in 2013 SCC that the cash-credit limit is a facility provided by the bank to its customers to use and utilise the money and if such facility is availed of, it would attract the interest to be charged for the same so utilised. It was further held that the cash-credit facility is not a debt to be attached by the respondent authority.
The order of provisional attachment before the assessment order is made may be justified if the assessing authority or any other authority empowered in law thinks that it is necessary to protect the interest of revenue.
On the other hand, it was submitted that Section 83 of the Central Goods and Services Tax Act, 2017 gives power to the GST authority to provisionally attach the bank accounts to protect revenue in certain cases. Cash-credit facility is also a bank account issued by the bank in favour of the petitioner wherefrom the petitioner is using a credit facility for business. It was found from the record of the case that even the petitioner has been paying GST from the said cash-credit account.
It was contended that where there is an efficacious and speedy remedy in the statute, such remedy cannot be bypassed and no relief should be granted to the petitioner in this regard under Article 226 of the Constitution of India.
In Overseas Bank Vs. Ashok Shaw Mill reported (2009), the Apex Court held that Section 17 of the Act permits the borrower who is aggrieved by measures taken against him under Section 13(4) to approach DRT and the DRT has been visited with the power to declare any such action invalid. Section 17(3) of the Act vests with the DRT, the authority to question the action taken by the secured creditor.
While allowing the appeal, Justice Bibek Chaudhuri observed that subsection 5 of Section 159 gives adequate power to the petitioner to file an objection for releasing the bank account or, in the instant case cash-credit facility and held that cash credit cannot be attached.
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