2023 (5) TMI 1125 - HC - GST

Provisional attachment of cash-credit facility - Section 83 of the CGST Act - HELD THAT - It is found from the record of the case that even the petitioner has been paying GST from the said cash-credit account - Be that as it may, it is held by this Court that cashcredit facility is not a debt and therefore, it cannot be made attachable. This Court is bound by the above-stated precedent. Efficacious and speedy remedy in the statute - HELD THAT - The issue as to whether relief under writ jurisdiction should be granted in a case where there is alternative statutory remedy was called upon for determination before the Hon ble Supreme Court in relation Section 13 and Section 17 of the SARFAESI Act. In MARDIA CHEMICALS LTD. VERSUS UNION OF INDIA 2004 (4) TMI 294 - SUPREME COURT , it was observed by the Hon ble Supreme Court while dealing with a constitutional challenge to the validity of Section 17 of the SARFAESI Act that borrowers cannot be left remediless in this case they have been wronged by a secured creditor, bank or financial institutions and that borrowers have a right to approach the DRT after measures are taken against the borrower under Section 13 (4) of the Act and the same provides reasonable protection to the borrower - The Supreme Court ultimately held that the High Court will not ordinarily entertained a petition under Article 226 of the Constitution of India, if an effective remedy is available to the aggrieved person and that this Rule applies with greater rigour in matters involving recovery of public money and the dues of the bank and other financial institutions. In the instant case, it relates to recovery of GST. Subsection 5 of Section 159 clearly gives adequate power to the petitioner to file objection for releasing the bank account or, in the instant case cash-credit facility - In view of such circumstances, when there is efficacious relief in the statute itself, this Court is of the view that the petitioner should adopt such efficacious relief and this Court is not inclined to afford any relief under Article 226 of the Constitution. Petition dismissed.

Summary

Issues involved:
1. Allegations of false export, incorrect e-way bills, and non-receipt of goods leading to a show cause notice for disallowing input tax credit, imposing interest, and penalty.
2. Provisional attachment of cash-credit facility by the respondent under Section 83 of the CGST Act challenged by the petitioner.
3. Contention regarding the availability of alternative statutory remedy under Rule 159 Sub-Rule 5 and the grant of relief under Article 226 of the Constitution of India.

Issue 1: Allegations of False Export and Incorrect E-way Bills
The petitioner, a partnership firm, faced allegations of false export, incorrect e-way bills, and non-receipt of goods, resulting in a show cause notice by the State Tax Department. The notice sought to disallow input tax credit, impose interest, and penalty. The petitioner challenged the notice in court, citing discrepancies in the allegations made by the authorities.

Issue 2: Provisional Attachment of Cash-Credit Facility
The respondent provisionally attached the cash-credit facility of the petitioner's firm, invoking Section 83 of the CGST Act to protect revenue. The petitioner contended that the cash-credit facility is not a debt and should not be subject to attachment. Citing legal precedents, the petitioner argued against the attachment, emphasizing the nature of the cash-credit facility and its usage for business purposes, including GST payments.

Issue 3: Availability of Alternative Statutory Remedy
The respondent argued that Rule 159 Sub-Rule 5 provides a remedy for property attachment, suggesting that the petitioner should follow the statutory procedure instead of seeking relief under Article 226 of the Constitution. Legal references were made to cases involving statutory remedies, emphasizing the importance of utilizing available avenues for redressal, especially in matters concerning recovery of public money such as GST dues.

In the judgment, the court considered the contentions of both parties. The petitioner relied on legal interpretations to assert that the cash-credit facility should not be subject to provisional attachment under Section 83 of the CGST Act. The court, guided by precedents and statutory provisions, concluded that the cash-credit facility is not akin to a debt and therefore cannot be attached. Additionally, the court highlighted the availability of alternative statutory remedies under Rule 159 Sub-Rule 5, emphasizing the importance of utilizing such remedies when they exist. Ultimately, the court dismissed the writ petition, directing the petitioner to pursue the available statutory relief mechanisms rather than seeking recourse under Article 226 of the Constitution.