2015 (12) TMI 1476 - HC - VAT and Sales Tax

Failure to VAT - Attachment of the petitioners bank accounts and immovable property in the form of residential flat and office premises as per the details given in the petitions - Held that - in the opinion of this court, the Government revenue is sufficiently secure in view of the attachment of the residential premises and office premises. Under the circumstances, the respondents do not appear to be justified in further attaching all the bank accounts of both the petitioners. In the opinion of this court, the attachment of the bank accounts must, in all probability, have brought the business of the petitioners to a standstill, inasmuch as, they would not be in a position to encash the cheques received by them nor make other payments by way of cheque. However, having regard to the submissions advanced by the learned Assistant Government Pleader, this court is of the view that while releasing the attachment of the bank accounts, the petitioners are required to be put to certain terms to maintain a particular balance in the bank accounts. - Decided in favour of assessee.

Summary

Issues:
Challenge to attachment of bank accounts and immovable property by Value Added Tax Department.

Analysis:
The petitioners challenged the attachment of their bank accounts and immovable properties, a residential flat, and office premises by the Value Added Tax Department. The petitioners, engaged in the cotton business in Gujarat, were subjected to a search due to suspected fraudulent actions of a tax consultant. The respondents attached bank accounts and properties valuing more than Rs. 1 crore and Rs. 25 lakhs, respectively, claiming non-payment of approximately Rs. 50 lakhs in value-added tax. The petitioners contended that the attachment was unjustified, as the amount mentioned in the orders did not reflect the actual funds available in their accounts. They argued that the attachment hindered their business operations.

The government, represented by the Assistant Government Pleader, argued that the petitioners were involved in fraudulent transactions amounting to Rs. 3,50,00,000, received as a refund by another entity. Therefore, the government believed that the recoverable amount exceeded Rs. 50 lakhs per petitioner. The court examined the notices issued under the Gujarat Value Added Tax Act, which indicated the alleged tax dues of around Rs. 50 lakhs per petitioner. The attachment orders valued the properties at more than Rs. 1 crore and Rs. 25 lakhs. The court noted that the attachment of immovable properties worth over Rs. 1.25 crore adequately secured the government revenue. However, the blanket attachment of all bank accounts was deemed unjustified and likely to halt the petitioners' business operations.

Considering the submissions and evidence, the court ruled in favor of the petitioners. The court quashed the attachment of bank accounts while maintaining the attachment of the residential and office premises. The petitioners were instructed to maintain a balance of Rs. 5,00,000 in specific bank accounts and cooperate in the assessment proceedings without unnecessary delays. The court's decision aimed to balance the government's interest in securing revenue with the petitioners' need to conduct their business operations smoothly.