ORDER V. K. SINGHAL, J. - The petitioner is aggrieved by the letter of the Assistant Commissioner of Commercial Taxes by which overdraft or credit facility have been considered as the money of defaulter/customer. 2. This interpretation is contrary to law as well as the bank practice. If there is any amount of the defaulter with the bank and the commercial tax department issues notice under section 14 of the Act, then the Bank is bound to remit it. But, if the facility has been given to customer to draw overdraft or any credit facility, in that case the said amount cannot be considered as belonging to the customer and the bank is not under the obligation to make payments to the department. It appears that the matter was examined by the Commissioner of Commercial Taxes and the following interpretation was given : "2. The argument seems to be that in respect of an 'overdraft account' the customer is always the bank's debtor and the bank is his creditor. That the bank does not owe any money to the customer in such an account and that by the very terms of sanction of such account, the customer has to credit the proceeds of their business to that account to enable the bank to adjust it to the overdraft amount. That if the customer does not issue cheques and if the funds are not available within the sanctioned Iimit, on its own, the bank cannot pay any amount because the bank does not owe any money to the customer. 3. The matter has been examined and it is considered that once a bank sanctions overdraft facility to a dealer, it binds itself to pay to the dealer the amount of money agreed to be advanced under the overdraft arrangement. In that sense, the bank owes that sum of money to the dealer. And therefore, the bank cannot resile from that position when a demand for the tax arrears comes so long as a demand is within the limit of overdraft agreement the bank cannot refuse compliance to the extent of the agreed amount." 3. In Jay Engineering Works Ltd. v. Syndicate Bank Ltd. 1981 Tax. And therefore, the bank cannot resile from that position when a demand for the tax arrears comes so long as a demand is within the limit of overdraft agreement the bank cannot refuse compliance to the extent of the agreed amount." 3. In Jay Engineering Works Ltd. v. Syndicate Bank Ltd. 1981 Tax. LR NOC page 78 in suit No. 88 of 1980 decided on September 2, 1980, the Calcutta High Court has held : "Section 226(3) does not create a new right but only enables the income-tax department through a special procedure to recover the dues of the department. Where the bank was the secured creditor and the security of the bank was crystallised to the extent that the goods over which there was a floating general charge in favour of the bank was ascertained and determined were supplied to the 'A' company, on condition that the goods were held in trust and that the money would be payable to the bank and not to the assessee-company, the money, i.e., sale proceeds could not be said to be due and payable to the assessee-company and hence the said money would not be payable to the income-tax department under section 226(3) for recovery of taxes due on the assessee-company and consequently the question of priority between income-tax department and bank did not arise." The Madras High Court in the case of K. M. Adam v. Income-tax Officer-II, Addl. II Circle, Madras [1958] 33 ITR 26 observed that : (page 32) "In my judgment when a bank lends money on overdraft and the customer is always in debit there is no stage at which the bank is a debtor to its customer, nor any point of time at which it holds any money of his on his account. Section 46(5-A) of the Act cannot on any construction be intended as a credit-freeze, with this feature superadded, that if there was any thawing, the resultant credit released became immediately payable to the department. Of course, if at any stage the account of the customer is in credit, section 46(5-A) would come into play and the sum so standing to the credit of the assessee might be directed to be paid over." 4. Of course, if at any stage the account of the customer is in credit, section 46(5-A) would come into play and the sum so standing to the credit of the assessee might be directed to be paid over." 4. Under section 14 of the Karnataka Sales Tax Act, 1957, any person from whom money is due or may become due to the dealer or who holds or may subsequently holding money for or on account of the dealer is liable to pay to the assessing authority the said amount. A credit facility by way of overdraft or otherwise cannot be considered to be authorising the department to realise the amount for which the bank has agreed to give the loan. If the account of the defaulter runs in debit and there being no credit in his account, this should not be considered as the money belonging to the defaulter. The bank is under no obligation to make payment to the commercial tax department. It is only when the bank or the other person holds any money on behalf of the defaulter or may be found subsequently holding. If at any particular point of time the bank overdraft limits are availed, it cannot be considered that the money which is being drawn from the bank belong to the defaulter. The bank does not owe the money to-the defaulter. Sanction of overdraft facility creates an agreement between the bank and the borrower and it cannot be considered that the bank is owing the money with the borrower simply because overdraft facility has been given. 5. Accordingly, annexures D and E, are quashed. It is clarified that the facility gives to the customer is not the amount owned by the said customer or due and payable to him and as such the interpretation is not in accordance with law. The petition is allowed. Petition allowed.