The Gujarat High Court has held that the cash credit account of assessee cannot be provisionally attached in exercise of powers under GST.
The applicant, Manish Scrap Traders has prayed for the quashing and setting aside of the order for provisional attachment of the bank account vide FORM GST DRC-22 dated 29.11.2021 issued by Respondent as the same is dehors the provisions of Section 83 of the CGST Act, 2017 and since the attachment of the cash credit account, not being the property of tax payer, is not permissible in law.
The cash credit account in the case on hand, could be said to have been opened to enable the writ applicant to borrow the money from the Bank for the purpose of its business. Any money therefore, that the Bank may make available to the assessee would necessarily be in the nature of a loan or a cash credit facility. In either case, it would be in the nature of borrowing by the writ applicant from the Bank. In such circumstances, the Bank and the writ applicant therefore, do not have the debtor – creditor relationship. The decision of this Court in the case of Kaneria Granito Ltd. has been followed in various other matters of the present type over a period of time. Various orders have been passed over a period of time condemning the action on the part of the department in provisionally attaching the cash credit account in exercise of powers under Section 83 of the Act.
The division bench of Justice J.B.Pardiwala and Justice Nisha M. Thakore held that the law is well-settled that a cash credit account of the assessee cannot be provisionally attached in exercise of powers under Section 83 of the CGST Act.
“The order of provisional attachment of the cash credit account of the writ-applicant is hereby quashed and set-aside,” the court said.
MANISH SCRAP TRADERS vs PRINCIPAL COMMISSIONER
CITATION: 2022 TAXSCAN (HC) 173
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