Gujarat HC issues Notice to GST Dept. on plea challenging Provisional Attachment of Cash Credit account running [Read Order]

Gujarat High Court - Notice - GST Department - plea challenging provisional attachment - cash credit account - Taxscan

The Gujarat High Court has issued the notice to the Axis Bank on a plea challenging the provisional attachment of cash credit account running.

The petitioner, Manish Scrap Industries has assailed the order of provisional attachment of a cash credit account running in the name of the writ applicant, maintained with the Axis Bank at Vapi. The impugned order of provisional attachment of the cash credit account has been passed in the Form GST DRC-22. The order has been passed by the respondent in exercise of powers under the provisions of Section 83 of the CGST Act, 2017.

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 division bench of Justice J.B.Pardiwala and Justice Nisha M.Thakore Prima facie opined that the Principal Commissioner, CGST, Surat is in contempt. He owes an explaination as to on what basis he has distinguished all the orders passed by this Court over a period of time taking the view that a cash credit account could not be provisionally attached in exercise of powers under Section 83 of the Act, 2017.

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