2007 (10) TMI 559 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge to attachment order under section 27(2)(a) of the Andhra Pradesh Value Added Tax Act, 2005 for assessment years 2004-05 and 2005-06.

Analysis:
The High Court of Andhra Pradesh, comprising BILAL NAZKI and RAMESH RANGANATHAN, JJ., heard the case challenging an attachment order dated July 2, 2007, passed under section 27(2)(a) of the Andhra Pradesh Value Added Tax Act, 2005. The petitioner contested the attachment of amounts due from respondent Nos. 3 to 5 concerns, claiming that the attachment exceeded the amounts claimed by the department. The court noted that the attachment was in relation to the assessment years 2004-05 and 2005-06. It was revealed that the Commercial Tax Officer had sought approval for attachment based on the anticipation of heavy demands post-assessment orders, without any formal opinion being framed to protect the Revenue's interests. The court emphasized that an attachment order under section 27(2)(a) can only be justified if the prescribed conditions are met, including the authority forming an opinion for the protection of Revenue interests.

The court acknowledged that the attachment for the year 2004-05 had lost relevance as the assessment order had already been finalized. However, for the subsequent year 2005-06, where no assessment order had been issued, the attachment remained pertinent. The petitioner argued that attachment before assessment is not routine and must comply with the conditions specified in section 27(2)(a) of the Act. The court highlighted that the provision allows for provisional attachment only when the prescribed authority deems it necessary to protect Revenue interests. In this case, the court found that no such opinion had been formally framed, and mere anticipation of heavy demands post-assessment was insufficient grounds for attachment under the Act.

Consequently, the court allowed the writ petition, quashing the attachment proceedings dated July 2, 2007. The Department was granted the liberty to reexamine the matter and take appropriate actions within the confines of the law if deemed necessary. No costs were awarded in the judgment.