2020 (12) TMI 485 - HC - GST

Provisional attachment of the bank accounts - Section 83 of the Gujarat Goods and Services Tax Act - HELD THAT - By way of an interim order, it is directed that the provisional attachment of the cash credit account referred to above maintained with the AMCO Bank, Ahmedabad, shall no longer operate. The provisional attachment is ordered to be lifted. The AMCO Bank shall permit the writ applicant to operate the Cash Credit Account. So far as other two accounts maintained with HDFC Bank Ltd. are concerned, appropriate order shall be passed on the next date of hearing. Let Notice be issued to the respondents, returnable on 23.12.2020. No further notice now be issued to the respondents as Mr. Chintan Dave, the learned AGP has already entered his appearance.

Summary

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.