2007 (7) TMI 615 - HC - VAT and Sales Tax

Realisation of the arrears of tax by attaching the bank accounts - Held that - The cheque for 1, 84, 454 issued by the petitioner was dishonoured as early as on July 1 2004 and that the petitioner should have realised their mistake and started paying the arrears of admitted tax to show their bona fide. Even thereafter the petitioner had been continuously issuing cheques ignoring the fact that prosecution can be launched against them under the provisions of the Negotiable Instruments Act. There is no bona fide on the part of the petitioner in fulfilling the statutory obligation. Action taken by the respondent for realisation of the arrears of tax by attaching the bank accounts of the petitioner cannot be found fault with and there is no illegality. Equity cannot be extended to a person who has not only been evading to pay tax but also issued cheques knowing fully well that the same would be dishonoured. Moreover in the pleadings the petitioner has suppressed the details relating to the notices issued by the Department and also the cheques issued by them which were subsequently dishonoured. I do not find that the petitioner has made out any case for invocation of the extraordinary jurisdiction of this court warranting interference.

Summary

Issues involved:
Petition to quash order for bank attachment and seek relief for tax payment delay.

Detailed Analysis:
The petitioner, a rolling shutters business registered under the Companies Act, sought relief from a bank account attachment due to financial difficulties. The petitioner acknowledged tax liabilities for assessment years 2004-05, 2005-06, and 2006-07, totaling Rs. 18,33,314. Despite financial setbacks, the petitioner offered to pay Rs. 2,00,000 towards arrears and requested more time for payment. The respondent, however, issued notices for tax payment, leading to bank attachment. The petitioner's cheques towards tax arrears were dishonored multiple times, raising doubts about their intentions. The respondent justified the bank attachment under section 26 of the TNGST Act due to non-payment of admitted tax.

The respondent's counter-affidavit detailed the petitioner's history of non-payment despite repeated notices. The petitioner's habit of defaulting on tax payments and issuing dishonored cheques raised concerns about their sincerity. The respondent's actions under section 26 of the TNGST Act were deemed valid, given the petitioner's consistent evasion of tax obligations. The court noted the petitioner's failure to honor any cheques and their continuous issuance of dishonored cheques, undermining their credibility. The court found no grounds to intervene, considering the petitioner's evasive behavior and lack of genuine efforts to settle tax arrears.

The court emphasized the importance of fulfilling statutory tax obligations promptly and criticized the petitioner for neglecting their responsibilities. Despite the petitioner's offer to pay by cheque, the court highlighted their history of dishonored cheques and evasion. The court concluded that equity cannot be extended to those evading tax payments and issued a judgment dismissing the writ petition and associated costs, citing the lack of a valid case for court intervention.

In conclusion, the court upheld the respondent's actions to recover tax arrears through bank attachment, highlighting the petitioner's consistent evasion and lack of genuine efforts to settle tax liabilities, leading to the dismissal of the writ petition.