1995 (7) TMI 396 - HC - VAT and Sales Tax

Summary

Issues:
- Interpretation of Section 17-B of the A.P. General Sales Tax Act, 1957 regarding provisional attachment of property to protect revenue during assessment proceedings.
- Legality of invoking Section 17-B when appellate authority has granted conditional stay for recovery of tax assessed.
- Examination of the impugned order of attachment under Section 17-B and its sustainability in law.

Analysis:
The judgment by the Andhra Pradesh High Court, delivered by Justice Syed Shah Mohammed Quadri and Justice Bikshapathy G., pertains to the interpretation and application of Section 17-B of the A.P. General Sales Tax Act, 1957. Section 17-B empowers the assessing authority to provisionally attach property belonging to the assessee during the pendency of assessment proceedings to protect the revenue. The section outlines specific scenarios where this power can be invoked, such as during the assessment of turnover or reassessment of escaped turnover, with the prerequisite of previous approval from the Commissioner in writing. The provisional attachment is a temporary measure lasting six months unless extended by the Commissioner for valid reasons, not exceeding two years.

In the case under consideration, the petitioner had filed an appeal against the sales tax assessment for certain years and obtained a conditional stay for tax recovery from the appellate authority, subject to furnishing a bank guarantee. Despite complying with the conditions of the stay order, the Commercial Tax Officer issued an order of attachment under Section 17-B. The Court was tasked with determining the legality of this attachment order in light of the statutory requirements of Section 17-B. The Court unequivocally held that the impugned order of attachment was unsustainable both factually and legally.

The Court emphasized that the purpose of attachment under Section 17-B, to ensure security for tax recovery, had already been addressed through the bank guarantee furnished by the petitioner as per the conditional stay order. Therefore, issuing a separate attachment order was deemed unnecessary and redundant. Even if all other conditions of Section 17-B were met, the Court ruled that the attachment order could not stand while the conditional stay order was in effect and the petitioner had complied with its conditions. Consequently, the Court declared the impugned order illegal and quashed it, allowing the writ petition in favor of the petitioner. The judgment serves as a reminder that statutory provisions must be strictly adhered to, and arbitrary exercises of power by authorities will not be tolerated.