Case Details: Ratna Cafe vs. Assistant Commissioner, CGST & Central Excise, Chennai (2026) 41 Centax 12 (Mad.)
Judiciary and Counsel Details
- C. Saravanan, J.
- Shri Raghav Rajeev, for the Petitioner.
- Shri Sai Sruajan Tayi, Sr. Standing Counsel & Mrs Ananda Gomathy, for the Respondent.
Facts of the Case
The petitioner was subjected to recovery proceedings pursuant to an order-in-original passed under the CGST Act confirming GST dues. Consequent to such order, the department proceeded to attach the bank account of the petitioner in exercise of powers under section 79 of the CGST Act. It was noted that the account maintained by the petitioner with the bank was an overdraft account and not a regular credit balance account. The petitioner challenged the attachment on the ground that an overdraft account could not be subjected to attachment under the recovery provisions. It was also observed that no statutory appeal had been filed within the prescribed time when the attachment was effected. The matter was accordingly placed before the High Court.
High Court Held
The High Court held that an overdraft account could not be attached under the recovery provisions of section 79 of the CGST Act, as such an account does not represent funds of the assessee but amounts extended by the bank. It was observed that the attachment of an overdraft account was impermissible in law and therefore liable to be set aside. The Court, however, clarified that the department was not precluded from proceeding against secured assets, if any, offered by the petitioner, subject to the rights of the bank. It further held that such recovery action would remain subject to the outcome of any appeal proposed to be filed by the petitioner. Accordingly, the attachment of the overdraft account was set aside with liberty granted to the department to proceed in accordance with law.
