The Calcutta High Court ordered to lift provisional attachment and held that Cash-Credit Facility is not debt hence cannot be made attachable.
The intra-Court appeal was directed against the order passed in WPA 12132 of 2023. By the said order the writ petition was disposed of by relegating the appellant to resort to the remedy provided under Section 159(5) of Central Goods and Services Tax Rules 2017.
The petitioner, J.L. Enterprises was aggrieved by an order of provisional attachment of cash credit account maintained by the appellant with its banker. The legal question involved in the writ petition was whether an order of provisional attachment can be made to a cash credit account.
The Single Bench has noted all the decisions, which were cited by the advocate for the appellant and has held that the cash credit facility is not a debt and, therefore, it cannot be made attachable and that the writ Court is bound by the precedent.
The Gujarat High Court in Valerius Industries Vs. Union of India, observed that cash-credit facility is not a debt and therefore, it cannot be made attachable.
A Division Bench of Chief Justice TS Sivagnanam and Justice Uday Kumar observed that “Therefore, we are of the view that the writ Court ought to have allowed the writ petition in its entirety instead of relegating the appellant to a remedy which is inapplicable to the cases where there is an order of provision attachment of a cash credit account.”
“The appeal stands allowed and the order passed by the writ Court is set aside insofar as it directs the appellant to avail the remedy under Sub-Section 5 of Section 159 of the Rules and in other respect where the writ Court has rightly accepted the legal position stands confirmed” the Bench noted.
The Court also directed the respondents to lift the order of provisional attachment of the cash credit account within 10 days from receipt of the server copy of this order.
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