2020 (12) TMI 1165 - HC - GST

Attachment of cash credit account - Section 83 of the GST Act - the interest of the revenue could be said to be secured for the time being with the provisional attachment of the immovable properties - HELD THAT - So far as the provisional attachment of the cash credit account maintained with the Canara Bank is concerned, the same should not continue. This Court in many matters has taken the view that the cash credit account cannot be attached in exercise of the power under Section 83 of the GST Act. We take notice of the fact that there are two current accounts maintained with the Canara Bank and rest are the Fixed Deposits. We are not touching the Fixed Deposits for the time being. We are of the view, having regard to the balance in one of the current account that the writ applicant should be permitted to operate the current account - we intend to pass an ad- interim order directing that the Cash Credit Account two accounts at Sr. Nos.1 and 2 are ordered to be defreezed. The provisional attachment is ordered to be lifted. Post this matter along with the Special Civil Application No. 11209 of 2020 in the third week of January, 2021.

Summary

Issues:
1. Whether the provisional attachment of the immovable properties and bank accounts under Section 83 of the GST Act is justified?
2. Whether the writ applicant should be allowed to operate his bank accounts to prevent business disruption?

Analysis:
1. The Court considered the justification of attaching bank accounts in addition to immovable properties under Section 83 of the GST Act. The Court noted that the interest of revenue might be secured with the provisional attachment of immovable properties, raising the question of the necessity to freeze bank accounts. The learned AGP representing the respondents highlighted that the provisional attachment of immovable properties was challenged in a separate petition before the Court. The Court acknowledged previous rulings that cash credit accounts cannot be attached under Section 83 of the GST Act, distinguishing between current accounts and fixed deposits held with a specific bank.

2. In the judgment, the Court decided not to touch the fixed deposits but allowed the writ applicant to operate the current accounts based on the balance in one of the accounts. An ad-interim order was passed directing the defreezing of specific accounts, while maintaining the provisional attachment on fixed deposits. The Court scheduled a future hearing along with the pending Special Civil Application related to the provisional attachment of immovable properties. The respondents were directed to file an affidavit-in-reply before the next hearing in January 2021, with permission for direct service of the order.