The Gujarat High Court in the case of Manish Scrap Traders Vs. Principal Commissioner issued the notice to the GST Principal Commissioner for its contempt for provisionally attaching cash credit accounts.
The appellant has assailed the order of provisional attachment of a cash credit account running in the name of the writ applicant, maintained with the Axis Bank at Vapi. The impugned order of provisional attachment of the cash credit account has been passed in the Form GST DRC-22. The order has been passed by the respondent in exercise of powers under the provisions of Section 83 of the CGST Act, 2017.
The cash credit account in the case on hand, could be said to have been opened to enable the writ applicant to borrow the money from the Bank for the purpose of its business. Any money therefore, that the Bank may make available to the assessee would necessarily be in the nature of a loan or a cash credit facility. In either case, it would be in the nature of borrowing by the writ applicant from the Bank. In such circumstances, the Bank and the writ applicant therefore, do not have the debtor – creditor relationship. The decision of this Court in the case of Kaneria Granito Ltd. has been followed in various other matters of the present type over a period of time. Various orders have been passed over a period of time condemning the action on the part of the department in provisionally attaching the cash credit account in exercise of powers under Section 83 of the Act.
The division bench of Justice J.B.Pardiwala and Justice Nisha M.Thakore prima facie, noted that the Principal Commissioner, CGST, Surat is in contempt. He owes an explanation as to on what basis he has distinguished all the orders passed by this Court over a period of time taking the view that a cash credit account could not be provisionally attached in exercise of powers under Section 83 of the Act, 2017.
“On the next date of hearing, we want the Principal Commissioner, to explain in what circumstances the impugned order has been passed,” the court ordered.
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