Skytech Rolling Mill Pvt. Ltd. Vs Joint Commissioner of State Tax Raigad (Bombay High Court)
Bombay High Court has declared that a “cash credit account” cannot be provisionally attached under Section 83 of the Maharashtra Goods and Services Tax (MGST) Act, 2017. The ruling came in the case of Skytech Rolling Mill Pvt. Ltd. Vs Joint Commissioner of State Tax, Raigad, where the petitioner challenged the provisional attachment of its cash credit account by the tax authorities.
The core of the dispute revolved around the interpretation of “any property, including bank account” as stated in Section 83(1) of the MGST Act, which grants the Commissioner the power to provisionally attach property to protect government revenue.
Skytech Rolling Mill Pvt. Ltd. argued that a cash credit account represents a liability owed to the bank for a loan facility, and therefore, it cannot be considered as property belonging to the account holder. The petitioner’s counsel contended that the phrase “including bank account” following “any property” in Section 83 should be understood to refer only to non-cash credit bank accounts, which represent actual assets of the taxable person.
The High Court concurred with the petitioner’s arguments. In its judgment, the bench stated, “The cash credit account is a liability which an account holder owes to the bank for availing the loan facility and therefore by no stretch of imagination cash credit account can be construed as a property belonging to the account holder/Petitioner.” The court further clarified that the phrase ‘including bank account’ in Section 83 would mean a non-cash credit bank account.
