GST / Indirect Tax : Provisional Attachment of Accounts by Tax Department

GST / Indirect Tax : Provisional Attachment of Accounts by Tax Department

In a recent decision the issue of provisional attachment of account was discussed. Allowing the petition, the action of employees of Tax Department was found to be contrary to law.

In case of Skytech Rolling Mill Pvt. Ltd. v Joint Commissioner of State Tax [2025] GCtR 1278 (Bombay), petition under Article 226 of the Constitution of India challenged 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. 

There was no dispute that the account attached under Section 83 of the MGST Act is "cash credit account". 

Short issue which arises for 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.

It was held that 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, a "cash credit account" would not be governed by Section 83 of the MGST Act.

It was held that "cash credit account" cannot be treated as "property" of the account holder which can be consider under Section 83 of the Act.