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High Court rules cash credit account cannot be provisionally attached under Section 83 of CGST Act The High Court ruled against the provisional attachment of a cash credit account under Section 83 of the CGST Act, 2017, finding that such accounts cannot ...
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High Court rules cash credit account cannot be provisionally attached under Section 83 of CGST Act
The High Court ruled against the provisional attachment of a cash credit account under Section 83 of the CGST Act, 2017, finding that such accounts cannot be provisionally attached. The Court criticized the Principal Commissioner for disregarding established legal precedent and directed the issuance of notices to the respondents, including Axis Bank, for an explanation. The Court indicated its intention to delve further into the Commissioner's actions in subsequent proceedings.
Issues: Challenge to order of provisional attachment of cash credit account under Section 83 of the CGST Act, 2017.
Analysis: 1. The High Court heard the counsel for the writ applicant challenging the provisional attachment of a cash credit account maintained with Axis Bank. The impugned order was passed under Section 83 of the CGST Act, 2017. The Court referred to a previous case where it was held that a cash credit account cannot be provisionally attached.
2. The Court noted that the cash credit account in question was used by the applicant to borrow money for business purposes, establishing a borrower-lender relationship with the Bank. Previous judgments have consistently condemned the provisional attachment of cash credit accounts under Section 83 of the Act.
3. The Principal Commissioner, CGST, Surat overlooked the established legal position and attempted to distinguish previous judgments by arguing that the attachment was done by a different authority in those cases. The Court found this reasoning unsatisfactory and indicated that the Commissioner may be in contempt for ignoring the settled law.
4. The Court directed the issuance of notices to the respondents and permitted direct service to Axis Bank. The Principal Commissioner was required to provide an explanation for the impugned order on the next hearing date. The Court expressed its intention to address the Commissioner's actions in detail during the upcoming proceedings.
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