2016 (5) TMI 496 - HC - VAT and Sales Tax

Seeking release from attachment of properties, movable and immovable, impounded items, stock of goods and bank accounts - Attached by virtue of provisional assessment orders made under Section 45 of the GVAT Act, 2003 - Petitioner submitted that the seized stock consists of goods which are perishable in nature and that part of the goods have already perished. The perishable stock, therefore, directed to be released and the attachment made on the bank account of the petitioners may also be lifted. Held that - since it appears that on preliminary investigation made in the case of the petitioners by the respondents, the estimated tax liability of the petitioners is tax of ₹ 2,59,920/- and penalty of ₹ 5,07,61,026/- under the provisional attachment order dated 22.2.2016 and tax of ₹ 12,73,586/- and penalty of ₹ 5,22,82,724/- under the provisional attachment order dated 19.4.2016. While a larger figure of ₹ 398.88 crores is also stated, such liability is stated to be the joint and several liability of all concerned in the alleged scam. No basis is stated for arriving at such figure in the said orders. Investigation and inquiry is still underway, and at this stage there is no assessed liability. Therefore, by considering the total estimated liability qua the petitioners upon preliminary investigation in their case, attachment of the movable and immovable properties of the petitioners is sufficient to secure such amount. Therefore, the court is inclined to grant ad-interim relief to the petitioners at this stage. The respondents are hereby directed to lift the provisional attachment made on the bank accounts of the petitioners as well as to delete the condition for maintaining stock to the extent referred to in the orders dated 19.04.2016 and to permit the petitioners to dispose of the perishable goods. The respondents shall also provide the copies of the impounded items to as expeditiously as possible. Direct service is permitted. - Interim relief granted

Summary

Issues:
1. Petitioner seeking release from attachment of properties under provisional assessment orders.
2. Nature of tax liability and penalties estimated by respondents.
3. Arguments regarding perishable goods in seized stock and impact on business activities.
4. Opposition to interim relief by Assistant Government Pleader.
5. Provision of copies of impounded items to petitioners.

Analysis:
1. The petitioner sought release from the attachment of properties, both movable and immovable, under provisional assessment orders made under section 45 of the Gujarat Value Added Tax Act, 2003. The estimated tax liability and penalties imposed by the respondents were highlighted in the orders, along with the joint and several liability of the concerned parties in an alleged scam amounting to a significant sum of &8377; 398.88 crores.

2. The petitioner's advocate argued that the seized stock contained perishable goods, some of which had already perished, making it impractical to maintain the existing stock. The petitioner's ability to conduct daily business activities was severely impacted due to the impoundment of hard disks, documents, and other materials by the respondents. The advocate requested the release of perishable stock, lifting of bank account attachments, and provision of relevant material copies to resume business operations.

3. The Assistant Government Pleader vehemently opposed granting interim relief to the petitioners, emphasizing the magnitude of the alleged scam and the ongoing investigations by both tax authorities and police. The provisional attachment orders were justified as necessary to secure revenue interests amidst the extensive fraudulent activities involving the petitioners and others.

4. The court, after considering the submissions from both parties, decided to grant ad-interim relief to the petitioners. The provisional attachment on bank accounts was directed to be lifted, the condition for maintaining stock was deleted, and permission was given to dispose of perishable goods. Additionally, the respondents were instructed to provide copies of the impounded items listed in Annexure-X to the petition promptly.

5. The court's decision aimed to balance the need to secure the estimated tax liability with the petitioner's request for relief regarding perishable goods and business continuity. The interim measures allowed the petitioners some respite while investigations into the alleged scam continued.