2001 (7) TMI 1266 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the provisional attachment notice.
2. Definition and scope of "property" under Section 17-B of the APGST Act.
3. Justification for provisional assessment and attachment.
4. Fairness and reasonableness of the provisional attachment.

Detailed Analysis:

1. Legality of the Provisional Attachment Notice:
The petitioner sought to quash the provisional attachment notice issued by the Commercial Tax Officer (Intelligence), attaching the petitioner's bank account under Section 17-B of the Andhra Pradesh General Sales Tax Act, 1957 (APGST Act). The petitioner argued that the attachment of the bank account was illegal and unauthorized, as a bank account, especially an overdraft account, does not constitute "property" within the meaning of Section 17-B.

2. Definition and Scope of "Property" under Section 17-B of the APGST Act:
The court examined whether a bank account could be considered "property" under Section 17-B. It was held that the term "property" is not defined in the APGST Act, but judicial precedents interpret "property" broadly to include money, bank accounts, and other assets. The court cited various Supreme Court judgments to support this interpretation, concluding that the overdraft bank account of the petitioner-company qualifies as "property" liable to be attached under Section 17-B.

3. Justification for Provisional Assessment and Attachment:
The court noted that Section 17-B empowers the assessing authority to provisionally attach any property of the assessee during the pendency of assessment or reassessment proceedings if it is necessary to protect the interests of the revenue. The court emphasized that this power should be exercised reasonably, fairly, and only on substantive grounds. In the present case, the assessment proceedings were pending, and the first respondent had obtained the Commissioner's approval for the provisional attachment. However, the court observed that the provisional assessment orders for the previous period were set aside by the appellate authority, and the petitioner had filed objections to the current show-cause notice, which were yet to be considered.

4. Fairness and Reasonableness of the Provisional Attachment:
The court held that the power to attach a bank account provisionally is a drastic measure and should be used sparingly. It should not be used to harass the assessee or paralyze their business operations. The court found that the first respondent's action in attaching the bank account was not in consonance with the principles of fair play, reasonableness, and non-arbitrariness. The court directed the petitioner to furnish security of immovable properties worth Rs. 19 lakhs to the satisfaction of the first respondent, instead of maintaining the bank account attachment. This arrangement was deemed sufficient to protect the interests of the revenue until the final assessment was completed.

Conclusion:
The writ petition was allowed in part. The provisional attachment notice was quashed, and the respondents were directed to lift the attachment upon the petitioner furnishing security of immovable property worth Rs. 19 lakhs within 15 days. This arrangement would remain valid until the finalization of the provisional or final assessment for the relevant period. No costs were awarded.