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.
Judicial Precedents Cited:
The court relied on several judicial precedents to support its decision. The petitioner successfully cited judgments from the Gujarat High Court in the cases of Manish Scrap Traders Vs Principal Commissioner and J. L. Enterprises Vs Assistant Commissioner from the Calcutta High Court. These decisions had previously quashed provisional attachments of cash credit accounts under similar provisions.
Furthermore, the Bombay High Court’s own Co-ordinate Bench’s ruling in M/S. Sargam Foods Pvt. Ltd. & Anr. Vs State of Maharashtra & Ors. (Writ Petition No. 4313 of 2008) was also cited. In this case, concerning a similar provision in the Navi Mumbai Municipal Corporation Act, the court had analyzed the nature of cash credit accounts and concluded that such accounts could not be attached as they are not assets or property of the account holder.
The court noted that no contrary judgments were presented by the respondents. Given the clear lack of jurisdiction and the existing precedents, the High Court opted to exercise its extraordinary jurisdiction under Article 226 of the Constitution of India, rather than relegating the petitioner to an alternative remedy.
The High Court directed the respondents to immediately withdraw the attachment letter issued to ICICI Bank within 24 hours. However, the court clarified that its order does not prevent the tax authorities from recovering any pending dues from the petitioner through other legally permissible modes.
This ruling clarifies the scope of provisional attachment powers under the MGST Act, affirming that cash credit accounts fall outside the ambit of “property” that can be provisionally attached under Section 83.
The Court has held that a cash credit account is not a property of a taxpayer and thus, cannot be attached provisionally under Section 83 of the GST Act.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. The Rule is made returnable immediately at the request of and with the consent of the learned counsel for the parties.
2. This Petition under Article 226 of the Constitution of India challenges the action of Respondent No.1, dated 8 May 2025, under Section 83 of the Maharashtra Goods and Service Tax (MGST Act) whereby the cash credit account of the Petitioner with ICICI Bank has been attached provisionally.
3. Heard learned counsel for the Petitioner and the Respondents.
4. There is no dispute that the account attached under Section 83 of the MGST Act is “cash credit account”. Therefore, the short issue which arises for our consideration is whether on a reading of Section 83 of the MGST Act, a “cash credit account” can be provisionally attached by exercising power under the said Section.
5. Section 83 of the MGST Act reads as under:-
Section 83. Provisional attachment to protect revenue in certain cases.-
1 [(1) Where, after the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue it is necessary so to do, he may, by order in writing, attach provisionally, any property, including bank account, belonging to the taxable person or any person specified in sub-section (1A) of section 122, in such manner as may be prescribed.]
(2) Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1).
[emphasis supplied]
6. Section 83 of the MGST Act provides for provisional attachment of ‘any property including bank account belonging to the taxable person’. 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 phrase ‘including bank account’ following the phrase, “any property” would mean a non cash-credit bank account. Therefore, in our view, a “cash credit account” would not be governed by Section 83 of the MGST Act.
7. Learned counsel for the Petitioner has rightly relied upon the decisions of the Gujarat High Court in the case of Manish Scrap Traders Vs Principal Commissioner1, J. L. Enterprises Vs Assistant Commissioner2 and J. L. Enterprises Vs Assistant Commissioner3 in support of his submissions that in these decisions provisional attachment under Section 83 of cash credit account has been quashed. The learned counsel for the Petitioner also submits that the similar issue arose before the Co-ordinate Bench of this Court in the case of M/S. Sargam Foods Pvt. Ltd. & Anr. Vs State of Maharashtra & Ors.4 wherein a very similar provision appearing in the Navi Mumbai Municipal Corporation Act fell for consideration of this Court and this Court after analysing the nature of the cash credit account held that such an account cannot be attached since it is not an asset or property of the account holder.
8. We have not been shown any judgment contrary to the above referred decisions. In any case, in our view, for the reasons stated above “cash credit account” cannot be treated as “property” of the account holder which can be consider under Section 83 of the Act.
9. The Respondents are directed to immediately withdraw letter dated 8 May 2025 addressed to the ICICI Bank, Malad
(E), Mumbai 97 and inform the same to the said bank immediately within next 24 hours.
10. We may however clarify that this order would not preclude the Respondents to recover by any other mode from the Petitioner, if any dues are pending, as per law.
11. Ordinarily, we would have relegated the petitioner to the alternate remedy. However, the impugned communication dated 8 May 2025 is wholly without jurisdiction and contrary to the precedents on the subject. Therefore, this Court has exercised its jurisdiction under Article 226 of the Constitution of India.
12. In view of the above, the Petition is allowed in terms of prayer clause (a) and (b) which reads as under :-
(a) Hold, adjudge and declare that the impugned order dated 08.05.2025 passed by the Respondent No.1 under Section 83 of the Maharashtra Goods and Services Act, 2017 (Exhibit F) is wholly without jurisdiction, arbitrary and illegal ;
(b) Issue a Writ of Certiorari or a Writ in the nature of Certiorari or any other writ, order, or direction, quashing the impugned order dated 08.05.2025 passed by the Respondent No.1 under Section 83 of the Maharashtra Goods and Services Act, 2017 (Exhibit F).
13. The Petition is allowed in the above terms.
14. All concerned must act on an authenticated copy of this order.
Notes:-
1 (2022) 141 taxmann.com 153 (Gujarat)
2 (2023) 152 taxmann.com 278 (Calcutta)
3(2025) 172 taxmann.com 266 (Calcutta)
4 Writ Petition No. 4313 of 2008
