2005 (3) TMI 732 - AT - VAT and Sales Tax

Summary

Issues:
1. Retention of books of accounts for more than one year without proper sanction.
2. Legality of bank accounts attachment without a valid demand notice.

Issue 1: Retention of books of accounts for more than one year without proper sanction

The petitioner sought a declaration that the respondent acted illegally by retaining the books of accounts for over a year without the necessary authority of law. The books were seized in 2001 under the West Bengal Sales Tax Act, and despite the petitioner being directed to explain the documents, she failed to appear multiple times. The petitioner argued that the retention of the books beyond the initial sanction period was illegal as no further sanction was obtained after 2003. The law requires proper sanction for retention exceeding one year, as stated in section 66 of the Act. The Tribunal referred to past judgments emphasizing the need for communication of reasons for retention and proper sanction from the Commissioner or Additional Commissioner. The failure to communicate such reasons would render the retention invalid. In this case, the books were retained beyond the authorized period without proper communication of reasons, making the continued retention illegal. Thus, the Tribunal ordered the immediate release of the books of accounts.

Issue 2: Legality of bank accounts attachment without a valid demand notice

The respondents had attached the petitioner's bank accounts without any outstanding tax demand or legal notice served. The petitioner argued that the attachment was illegal and requested its immediate withdrawal. The respondents defended the attachment, stating it was released upon the petitioner's undertaking to cooperate with the proceedings. However, the law dictates that attachment of a bank account requires a valid demand notice. The Tribunal highlighted that attachment without a demand notice is unwarranted and illegal, citing precedents from the High Court and Tribunal decisions. Consequently, the Tribunal ordered the release of the bank accounts and vacated any standing attachment orders.

In conclusion, the Tribunal allowed the petition, directing the immediate release of the books of accounts and other documents while also vacating any remaining attachment orders on the bank accounts. The judgment emphasized the importance of proper sanction for retention of documents and the necessity of a valid demand notice before attaching bank accounts. The decision upheld the legal principles outlined in the relevant provisions of the West Bengal Sales Tax Act and past judicial precedents, ensuring compliance with due process and protecting the rights of the petitioner.