Cash Credit Account Not Attachable Under MGST Bombay HC Ruling Explained
Recently, the Bombay High Court ruled that a cash credit account not attachable under Section 83 of the Maharashtra Goods and Services Tax (MGST) Act, 2017. This is a key relief for businesses facing GST recovery proceedings. Let’s break down this landmark decision and its implications for Indian taxpayers.
What Was the Case About?
- The department issued an order to provisionally attach a taxpayer’s cash credit account under Section 83 of the MGST Act.
- The taxpayer argued that a cash credit account is not their property but a facility extended by the bank.
- The Bombay HC agreed, ruling that a cash credit account is not attachable since it is not an asset of the taxpayer but a borrowing limit.
Reference: Provisional attachment under Section 83 of the MGST Act, 2017.
Why Cash Credit Account Not Attachable?
Key legal point:
- Section 83 allows provisional attachment of the property of the taxable person.
- Hence, attaching it impacts the business’s working capital and violates the provision’s intent.
Supporting Case Law:
Bombay High Court, Hindustan Unilever Limited vs. State of Maharashtra, March 2024.
What Does This Mean for Businesses?
- Protects working capital — businesses can continue operations without disruption.
- Reinforces that tax officers must act within the limits of Section 83.
- Unlawful attachment can be challenged in High Courts citing this precedent.
Expert Tip: How to Protect Your Accounts
- Keep clear segregation between loan/credit facilities and deposit accounts.
- If a provisional attachment order is issued, consult a GST expert immediately.
- Use this ruling to file a writ petition if your cash credit account is attached.
Summary (Snippet):
Bombay HC rules that a cash credit account not attachable under Section 83 MGST Act as it’s not taxpayer property but a bank facility, protecting business liquidity.
FAQs
Q1. What is provisional attachment under MGST Act?
It’s a power under Section 83 to attach taxpayer’s property to secure tax dues during proceedings.
Q2. Can the department attach my cash credit or overdraft account?
As per Bombay HC, No. A cash credit account is a borrowing limit, not your asset.
Q3. What should I do if my cash credit account is attached?
Challenge the order in High Court citing the latest Bombay HC ruling.
Final Words
This ruling clarifies a key protection for taxpayers using cash credit accounts. For any GST notices or provisional attachments, reach out to Efiletax’s experts for immediate assistance and hassle-free resolution.