2010 (1) TMI 1231 - HC - VAT and Sales Tax

Summary

Issues involved: Attachment of Overdraft Account u/s 39(1) of Karnataka Value Added Tax Act, 2003 without challenging assessment order.

The petitioner challenged the action of the Deputy Commissioner for Commercial Taxes in attaching their Overdraft Account No. 120206110240007 based on an order u/s 39(1) of the Karnataka Value Added Tax Act, 2003. The petitioner's business was affected due to the freezing of the account.

The petitioner argued that as per a previous court decision, the bank is not obligated to pay the amount in an Overdraft Account to the tax department. Therefore, the attachment of the petitioner's account was unjustified. The petitioner's counsel relied on the legal position established in M/s Karnataka Bank Limited Vs. Commissioner for Commercial Taxes {1999(2) KCCR S.N. 116}.

The Government Pleader contended that the writ petitions were not maintainable as the petitioner had not challenged the assessment order. It was suggested that the petitioner should appeal the assessment order before making grievances against the attachment order.

After hearing both parties, the court clarified that if the account with Vijaya Bank was an Overdraft Account, the attachment order should not freeze the account. The authorities were permitted to proceed against other accounts of the petitioner if necessary. The petitioner was also allowed to appeal the assessment order before the appropriate authority.

The writ petitions were disposed of with the above observations.