2013 (2) TMI 652 - HC - VAT and Sales Tax

Garnishee order challenged - Held that - No statutory basis for the circular issued by the Commissioner of Commercial Taxes dated March 11, 1996 and are of the view that the Commissioner had no jurisdiction to issue the said circular and thereby restrict or interfere with the exercise of the revisional jurisdiction by the revisional authorities. Therefore it would have been just and proper for the second respondent to await the disposal of the revision petitions by the fourth respondent before initiating proceedings for recovery of the disputed tax and penalty. His action in recovering the amounts pending disposal of the revision petitions before the fourth respondent has made the said revisions infructuous. We strongly deprecate this conduct of the second respondent and hold the same to be arbitrary and high-handed. Set aside the impugned garnishee notice dated December 7, 2012, issued by the second respondent; direct the second respondent to immediately remit the sum of ₹ 25,86,668 to the bank account of the petitioner in the fifth respondent-bank; set aside the non-speaking orders dated May 22, 2012 and June 7, 2012 passed by the third respondent rejecting the stay applications filed by the petitioner in the appeals challenging the orders of assessments and penalty; and direct the third respondent to pass fresh and reasoned orders on the applications within a period of four weeks from the date of receipt of a copy of this order.

Summary

Issues:
Challenge to garnishee order under section 29 of the Andhra Pradesh Value Added Tax Act, 2005; Arbitrary and illegal actions of the respondents; Non-speaking orders in dismissing stay applications; Pending revision petitions before the fourth respondent; Justification for the garnishee order; Application of legal principles regarding recovery of disputed tax and penalty; Jurisdiction of the Commissioner of Commercial Taxes; Setting aside the garnishee notice; Direction for remittance of funds and fresh orders on stay applications.

The judgment addresses the challenge to a garnishee order issued under section 29 of the Andhra Pradesh Value Added Tax Act, 2005. The petitioner, a charitable trust, contested the order directing a bank to remit a specific sum towards tax and penalty. The petitioner had filed appeals against assessment and penalty orders, seeking stay of collection, which were dismissed without reasoned orders by the third respondent. Subsequently, revision petitions were filed before the fourth respondent, which remained pending, leading to the garnishee proceedings. The petitioner argued that the actions of the respondents were arbitrary and illegal, rendering the revision proceedings infructuous.

The court examined the justification provided by the second respondent for the garnishee order, citing a circular by the Commissioner of Commercial Taxes and legal precedent. The court noted the dismissal of stay applications without reasoned orders, emphasizing the importance of preserving the statutory right of appeal for the assessee. The court criticized the delay in disposing of revision petitions and the lack of statutory basis for the circular restricting revisional jurisdiction. It held that the actions of the second respondent in initiating recovery before the revision petitions' disposal were arbitrary and high-handed, making the revisions infructuous.

Consequently, the court set aside the impugned garnishee notice, directing the immediate remittance of funds to the petitioner's bank account. It also instructed the third respondent to pass fresh and reasoned orders on the stay applications within four weeks. Pending the fresh decisions on stay applications, the second respondent was prohibited from taking steps to recover the disputed tax and penalty. The court highlighted the avoidable prejudice caused to the petitioner due to the arbitrary exercises of power by the respondents and awarded costs to the petitioner.

In conclusion, the writ petition was allowed with costs, addressing the issues related to the garnishee order, arbitrary actions of the respondents, non-speaking orders, pending revision petitions, legal justifications, and directions for setting aside the notice, remittance of funds, and fresh orders on stay applications.