2013 (7) TMI 209 - HC - VAT and Sales Tax

Provisional attachment of bank account and stock of brass scrap - pending assessment of the petitioner s liability to pay Value Added Tax with interest and penalties - Gujarat VAT Act, 2006 - Held that - As the petitioner s bank account has balance of ₹ 3986.48, which is of no great significance to the department & the petitioner s current stock worth is ₹ 72,56,480/is under attachment. As it is not pointed out by the respondent that there was any discrepancy in the physical stock and stock reflected in register, at the time of spot visit the provisional attachment is required to be lifted subject to petitioner maintaining certain minimum stock. This would on one hand, enable the petitioner to restart the business and on other hand, safeguard the interest of the department pending assessment - order of attachment lifted on the conditions that the petitioner would maintain minimum stock of the value of ₹ 35 lakhs, till the assessments are competed.

Summary

Issues Involved:
Provisional attachment of bank account and stock under Section 45 of the Gujarat Value Added Tax Act, 2006 pending assessment of VAT liability.

Analysis:
The petitioner challenged an order of provisional attachment of bank account and stock by respondent No.2 under Section 45 of the VAT Act. The petitioner argued that such powers should be used in rare cases and that there was no outstanding duty against them. It was highlighted that the petitioner had been dealing in brass scrap for years, had proper registration, and maintained accurate stock records. The petitioner disputed the denial of tax credit based on canceled registrations of some suppliers, asserting that all purchases were made before the cancellations. On the other hand, the respondents alleged that some purchases were not genuine, involving bogus dealers and discrepancies in transportation and weighing locations.

The court refrained from making conclusive statements due to pending assessments but acknowledged the drastic nature of the provisional attachment. A suggestion was made for a practical solution allowing the petitioner to resume business subject to further investigation and assessment. Factors considered included the petitioner's bank account balance, the value of the attached stock, lack of discrepancies in physical stock, and the timing of purchases in relation to canceled registrations.

Ultimately, the court decided to lift the provisional attachment conditionally, requiring the petitioner to maintain a minimum stock value of Rs. 35 lakhs until assessments are completed. The petitioner was directed to file an undertaking by a specified date to comply with this condition. Once the undertaking is filed, the order for lifting the attachment would come into effect, and the petition was disposed of.