2008 (9) TMI 889 - HC - VAT and Sales Tax

Issue of notice - non reply - provisional assessment - Held that - As it is evident that the petitioners who have not only failed to comply with the notices and have not remained present with the registers, material for the purpose of assessment and even thereafter have not chosen to resort to the remedy as provided under the Act itself, cannot be permitted to invoke the jurisdiction of this court under article 226 of the Constitution of India. As a matter of fact, the conduct of the petitioners would disentitle them from any indulgence by this court or exercise of discretionary relief. The petitioners cannot make a complaint that the assessment has not been made and there is any arbitrary or highhanded action inasmuch as there are specific notices issued to the petitioners and still they have failed and neglected to remain present for the purpose of assessment or clarification. Thereafter, as discussed hereinabove, in exercise of the powers under the Act, the Commissioner has proceeded to make the provisional assessment and attachment for which a grievance cannot be made. Thus this court is of the opinion that no indulgence can be granted and it does not call for any interference in exercise of its discretionary jurisdiction under article 226 of the Constitution of India.

Issues Involved:
1. Legality and arbitrariness of the attachment of bank accounts and premises.
2. Compliance with the Gujarat Value Added Tax Act, 2003.
3. Issuance of notices and provisional attachment orders.
4. Availability and exhaustion of alternative remedies.

Detailed Analysis:

1. Legality and Arbitrariness of Attachment:
The petitioners, proprietors of Shri Mahalaxmi Traders and Shri Bhavani Ispat, challenged the attachment of their bank accounts and premises. They argued that the actions of the respondent authorities were illegal, arbitrary, and violated the VAT Act. They contended that despite filing necessary returns, the authorities conducted inspections and attached their properties without justifiable reasons. The court noted that the authorities issued notices and provisional attachment orders due to the petitioners' failure to comply with the notices and produce the required records. The court found the actions of the authorities justified under the VAT Act, as the petitioners did not respond to the repeated notices.

2. Compliance with the VAT Act:
The petitioners alleged that the actions of the respondent authorities violated the VAT Act and the principles of natural justice. They argued that they had complied with all necessary requirements and that the authorities' actions were unjustified. The court, however, observed that the petitioners failed to respond to notices issued under sections 67, 70, and 70A of the VAT Act, which called for the production of relevant records. The court emphasized that the authorities acted within their powers under the VAT Act, including issuing provisional attachment orders to protect government revenue.

3. Issuance of Notices and Provisional Attachment Orders:
The petitioners contended that the issuance of notices and the subsequent provisional attachment orders were arbitrary and highhanded. They argued that the authorities did not provide sufficient reasons for their actions. The court, however, found that the authorities followed due process by issuing multiple notices, including notices in forms 401 and 301, and providing opportunities for the petitioners to comply. The court noted that the petitioners' failure to respond to these notices justified the provisional attachment orders under section 45 of the VAT Act, which allows for such measures to protect government revenue during ongoing assessment proceedings.

4. Availability and Exhaustion of Alternative Remedies:
The court highlighted that the petitioners did not exhaust the alternative remedies available under the VAT Act, such as filing appeals or revisions. The court stated that the petitioners should have availed themselves of these remedies before approaching the court under article 226 of the Constitution of India. The court emphasized that the petitioners' conduct, including their failure to respond to notices and produce necessary records, disentitled them from seeking discretionary relief from the court. The court concluded that the petitions were not maintainable under article 226, as the petitioners did not exhaust the statutory remedies available to them.

Conclusion:
The court dismissed the petitions, upholding the actions of the respondent authorities as justified under the VAT Act. The court emphasized that the petitioners' failure to comply with notices and produce necessary records warranted the provisional attachment orders. The court also highlighted the importance of exhausting alternative remedies provided by the statute before seeking relief under article 226 of the Constitution of India.

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