The Bombay High Court in the case of Skytech Rolling Mill Pvt. Ltd. Vs. Joint Commissioner of State Tax Nodal 1 Raigad Division vide Writ Petition No.1928 of 2025 dated 10.06.2025, addresses the issue concerning provisional attachment of a cash credit account under Section 83 of the MGST Act, . The Court held that attachment of a cash credit account is ultra vires Section 83 and without jurisdiction. The cash credit account is not attachable property under Section 83. The Court clarified that only accounts representing taxpayer’s funds are attachable and prevents misuse of Section 83 to arbitrarily freeze business credit lines.

Facts of the Case: In this case , the petitioner was having cash credit account in ICICI Bank. The authorities provisionally attached the petitioner’s cash credit account u/s 83 of the CGST Act. The Petitioner challenged provisional attachment of cash credit account under Section 83 of the Maharashtra Goods and Services Tax Act, 2017. 

Issue: Whether a cash credit account can be treated as “property” of the assessee and provisionally attached under Section 83 of the MGST Act.

Held That: The High Court noted the nature of Cash Credit Account and stated that a cash credit account is a borrowing facility, i.e., a liability, not an asset of the account holder. It is essentially a loan facility provided by the bank, where the account holder borrows funds up to a sanctioned limit. Such an account does not qualify as “property” belonging to the assessee.

Section 83 permits provisional attachment of “any property including bank account”. The phrase “bank account” refers to accounts holding the taxpayer’s own funds, not borrowed funds like cash credit. The Court held that Provisional attachment powers under GST law must be exercised strictly and cannot extend to third-party-owned or borrowed funds.

The Court placed reliance upon judgment in the case of Manish Scrap Traders (2022) and J.L. Enterprises v. Assistant Commissioner (2023) other cases wherein it was held that cash credit accounts cannot be attached under GST laws. 

The Court quashed the impugned attachment order dated 08.05.2025. Also, directed the respondents to withdraw the attachment order and inform the bank within 24 hours. However, the department is not precluded from recovering dues through any other lawful means.

Relevant Legal Provision

Section 83 of the MGST Act, 2017:

• Empowers provisional attachment of any property, including bank accounts, of the taxable person, to protect revenue during pendency of proceedings under Chapters XII (Assessment), XIV (Inspection/Search/Seizure), or XV (Demand and Recovery).

• The attachment remains valid for one year from the date of the order.