2000 (12) TMI 886 - HC - VAT and Sales Tax

Summary

Issues:
1. Quashing of impugned orders for provisional assessment and attachment of properties under the Sales Tax Act.
2. Formation of reasonable belief for initiating action under sections 41B and 48A.
3. Justification of provisional assessment and attachment of property.
4. Legal infirmity in the impugned action.
5. Consideration of interim relief for lifting attachment of movable properties.

Analysis:
1. The petitioner sought to quash the impugned orders for provisional assessment and attachment of properties under the Sales Tax Act. The Sales Tax Officer invoked powers under sections 41B and 48A, alleging tax evasion in branch transfers. The petitioner contended that branch transfers were not exigible to tax, challenging the justification for provisional assessment during the block period.

2. The crux of the issue revolved around the formation of a reasonable belief by the sales tax authority for initiating action under sections 41B and 48A. The petitioner argued that no reasonable ground existed to believe tax evasion due to branch transfers. The Sales Tax Department, however, presented incriminating evidence from searches indicating diversion of goods to Maharashtra without proper documentation.

3. The court analyzed the justification for the provisional assessment and attachment of property. The Sales Tax Officer had initiated proceedings based on evidence of tax evasion through branch transfers. The court noted the necessity to protect revenue and found the actions of the authority justified under the circumstances presented.

4. In assessing the legal infirmity in the impugned action, the court distinguished the present case from a previous judgment where insufficient grounds existed for provisional assessment. The court emphasized the presence of material and information supporting the reasonable belief of tax evasion, upholding the legality of the provisional assessment and property attachment.

5. The court considered an interim relief request to lift the attachment of movable properties to prevent losses to the petitioner's business activities. After evaluating the situation, the court granted an interim relief order, directing the lifting of attachment upon the petitioner furnishing security on immovable properties. This interim order was made final upon the dismissal of the petition.

In conclusion, the court dismissed the petition, finding no legal infirmity in the impugned action of provisional assessment and attachment of property. The court granted interim relief to lift the attachment of movable properties, ensuring the continuation of the petitioner's manufacturing and trading activities.