1989 (12) TMI 327 - AT - VAT and Sales Tax

Summary

Issues:
- Seizure of records by officers of the Bureau of Investigation
- Prohibitory orders issued by the Commercial Tax Officer on two banks preventing the applicant from operating his account
- Legality of the actions taken by the Bureau of Investigation and the Commercial Tax Officer

Seizure of Records:
The applicant, a dealer in various goods, had his records seized by officers of the Bureau of Investigation. The Commercial Tax Officer directed the applicant to produce relevant documents to explain the seized items. The applicant requested an adjournment due to physical illness, leading to multiple adjournments of the hearing. The applicant's bank accounts were also subjected to prohibitory orders by the Commercial Tax Officer, affecting his ability to operate them.

Prohibitory Orders on Banks:
The respondent, through the Commercial Tax Officer, issued prohibitory orders on two banks, preventing the applicant from operating his accounts. The banks cooperated with the orders, seeking clearance from the appropriate authority. The applicant challenged the legality of these actions, arguing that the respondent had no authority to issue such directions to the banks, thereby obstructing his account operations.

Legality of Actions:
The respondent contended that the prohibitory orders were necessary due to the applicant's alleged evasion of sales tax amounting to Rs. 7 lakhs. The respondent cited Section 14B of the Bengal Finance (Sales Tax) Act, 1941, as the basis for their actions. However, the Tribunal found that the respondent lacked the legal authority to issue directions to the banks to stop payment or account operations, even if the applicant was evading taxes. The Tribunal referenced a Supreme Court decision to support its ruling that such actions were unwarranted by law.

In conclusion, the Tribunal allowed the applicant's application, quashing the letters issued to the banks regarding the prohibitory orders. The Tribunal held that the actions taken by the respondent were without jurisdiction, and the applicant succeeded in challenging the legality of the prohibitory orders.