attachment order
SANJAY SINGH
(Querist) 30 July 2009
This query is : Resolved
Wheather sales tax attachment order is applicable on a cash credit account ?
A bank receives an attachment order of Rs.10.00lacs against a cash credit account and at the time of receiving of the order the balance in the account was Rs.24.00lacs against the c.c.limit of Rs.70.00lacs.
Wheather the attachment order is applicable on aborrowing account in which undrawan c.c.limit is available.?
A V Vishal
(Expert) 30 July 2009
In my opinion the order is appealable since the revenue can withhold to the extent the assessee is liable. I have come across a similar case law where the court rejected the revenue action and held the action was over the statutory powers of the revenue, however, I am unable to recollect the name of the case law.
SANJAY SINGH
(Querist) 30 July 2009
The question is not resolved.
I understand that the bank has right of general lien and the credit balance in a cash credit account is the money of the bank as a creditor not of the customer. Applicability of the attachment order in above case will result into payment of dues of an asseessee by the bank not by the assessee himself.
PALNITKAR V.V.
(Expert) 30 July 2009
Mr. Singh has good point. How can there be attachment of undrawn CC amount? Perhaps, the attachment order would be effective as soon as the borrower tries to avail the cash credit.
A V Vishal
(Expert) 31 July 2009
Refer S.29.of the APVAT Act:
(1) The Commissioner or any other authority prescribed may at any time or from time to time, by notice in writing (a copy of which shall be forwarded to the dealer at his last address known to such authority) require any person from whom money is due or may become due to the defaulter, or any person who holds or may subsequently hold money for, or on account of the defaulter, to pay to such authority, either forthwith if the money has become due or is so held, within the time specified in the notice but not before the money becomes due or is held, so much of the money as is sufficient to pay the amount due by the defaulter in respect of arrears of tax, interest, penalty or the whole of the money when it is equal to or less than that amount.
Provided that in case of banks, the amount due to the defaulting dealer includes the amounts payable to the dealers by virtue of the overdraft facility.
