2013 (12) TMI 1445 - HC - VAT and Sales Tax

Attachment of the petitioner' current account maintained with the second respondent-Bank as well as withdrawal of a sum of ₹ 6,07,682/- from that account - Held that - On perusal of the material on record, it is noted that the re-assessment order is passed in respect of M/s. Ambience Projects, which is a partnership firm. That order has no nexus to the petitioner firm and merely because one of the partners in M/s.Ambience Projects is a partner in the petitioner-firm also would not enable the Department to proceed against the petitioner partnership firm to the extent of withdrawing certain amounts from its current account. If recoveries have to be made by the Department, it should be from M/s.Ambience Projects or its partners. If any recovery has to be made from Sri.Hemanshu M.Shah who is one of the partners in M/s.Ambience Projects in his personal capacity then in that regard the details regarding his assets had to be known and hence, a notice could have been issued to the petitioner to furnish the details. - A coercive action against the petitioner who is stranger to the re-assessment proceedings would not serve the purpose at all. In that view of the matter, the attachment of the current account of the petitioner is illegal. - Decided in favour of assessee.

Summary

Issues:
1. Attachment of petitioner's current account and withdrawal of funds.
2. Legality of freezing the petitioner's account due to partner's dues.
3. Department's authority to recover dues from petitioner firm.
4. Coercive action against the petitioner firm.

Analysis:
1. The judgment addresses the issue of the respondents attaching the petitioner's current account and withdrawing funds amounting to Rs. 6,07,682. The petitioner sought direction against the bank to unblock the account. The court noted the actions of the respondents and the notice issued, leading to the writ petition challenging the attachment.

2. The court examined the legality of freezing the petitioner's account due to the dues of a partner in another firm. The petitioner argued no business connection with the firm in debt. The respondents defended their action as necessary for recovering dues from the petitioner firm, where the partner with dues was also involved. The court found the actions not in accordance with the law due to lack of nexus between the firms.

3. Regarding the authority of the department to recover dues from the petitioner firm, the court emphasized that the re-assessment order pertained to a different partnership firm, not linked to the petitioner. The court ruled that recoveries should be sought from the firm in debt or its partners, not from an unrelated entity like the petitioner firm.

4. The judgment addressed the issue of coercive action against the petitioner firm, emphasizing that such action was unwarranted as the petitioner was not involved in the re-assessment proceedings. The court directed the first respondent to seek details from the partner with dues and the petitioner firm, ensuring justice and fairness in resolving the matter. The court ordered the return of the withdrawn amount and the immediate defreezing of the petitioner's account.

In conclusion, the court disposed of the writ petition with directions for the respondents to act in accordance with the observations made, ensuring the rights and interests of all parties involved are upheld.