High Court grants relief to applicant, lifts attachment on bank account under GST Act

The High Court found in favor of the writ applicant regarding the challenge to the provisional attachment of the Cash Credit/Current Bank Account with AMCO Bank under Section 83 of the GST Act. The Court directed the lifting of the provisional attachment on this account, allowing the applicant to operate it. The decision on the accounts with HDFC Bank Ltd. was deferred to a later hearing. Notice was issued to the respondents for a future date, with the connected civil application being rendered irrelevant and disposed of accordingly.

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Issues:
Challenge to the legality and validity of the order of provisional attachment of bank accounts under Section 83 of the Gujarat Goods and Services Tax Act.

Analysis:
The writ application challenged the provisional attachment of bank accounts under Section 83 of the GST Act. Two orders were in question: one dated 28.08.2020 for the Cash Credit/Current Account with AMCO Bank, and the other for a Current Bank Account and a Savings Bank Account with HDFC Bank Ltd. The challenge was based on multiple grounds against the invocation of Section 83 by the respondents.

Analysis:
The Senior Counsel argued that the Cash Credit Account should not be attached, citing previous court orders. The Cash Credit Account allows borrowing money for business purposes, creating a debtor-creditor relationship between the bank and the assessee. The High Court's view was that attaching such an account was not appropriate, considering the nature of the account as a loan or cash credit facility.

Analysis:
The State respondents requested time for instructions on the matter. After considering both sides, the Court found a strong prima facie case in favor of the writ applicant regarding the Cash Credit/Current Bank Account with AMCO Bank. As an interim measure, the Court directed the lifting of the provisional attachment on this account, allowing the writ applicant to operate it. A decision on the accounts with HDFC Bank Ltd. was deferred to the next hearing.

Analysis:
Notice was issued to the respondents for a future date, with no further notice required as the AGP had already appeared. The order rendered the connected civil application irrelevant and disposed of accordingly.

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