Bombay High Court Stays Attachment of Cash Credit Account; Finds No Recorded Reasons in Order

The Bombay High Court granted interim relief to a company, staying its provisional attachment of its cash credit account.

The tax authorities had attached the cash credit account of the company under Section 83 of the Maharashtra GST Act. However, it was contended that Section 83 of the Maharashtra GST Act gives power to the Commissioner to provisionally attach any property or bank account. The petitioner argued that a cash credit account cannot be attached, claiming that it does not qualify as “property”.

The petitioner relied on a previous ruling of Skytech Rolling Mill Pvt. Ltd Vs Joint Commissioner of State Tax, where it was held that a “cash credit account” cannot be treated as “property” of the account holder, which can be considered under Section 83 of the Act. Further, the ruling also explained that a cash credit account is a liability owed to the bank and cannot be treated as the company’s property.

It was argued that the attachment order did not record any reasons to justify their action. The court also noted that there were no reasons recorded in the attachment order, which is a basic requirement of law.

The High Court said that the company had made a strong prima facie case for relief and stayed the provisional attachment of the account.