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2016 (7) TMI 282 - HC - VAT and Sales TaxRecovery of tax - attachment of all bank accounts of the appellant - order u/s 45 of the KVAT Act - appellant submitted that, all bank accounts of the appellant are freezed and resultantly, all activities have come to a grinding halt, and hence, this Court may take up the matter - Held that - Considering the facts and circumstances, it appears to us that the appeals are at large pending before the Tribunal and the appellant has deposited 30% of the amount and for the remaining 70% though the appellant was to furnish bank guarantee as per the interim order passed by the Tribunal and as the bank guarantee was not furnished, the powers were exercised under Section 45 of the KVAT Act. We find that freezing of the bank account or attachment of the bank account completely, would not serve any purpose, even if we consider the scope and ambit of Section 45 of the KVAT Act. - Order of attachment of bank accounts vacated subject to the conditions - Decided partly in favor of petitioner.
Issues Involved:
Appeal against dismissal of petitions challenging interim order by Tribunal and Section 45 of KVAT Act freezing bank accounts. Analysis: The High Court considered appeals against the dismissal of petitions challenging an interim order by the Tribunal and an order under Section 45 of the Karnataka Value Added Tax Act, 2003. The appellant's bank accounts were frozen due to non-compliance with the Tribunal's order to furnish a bank guarantee for 70% of the tax amount. The appellant argued that this freeze halted all activities. The Court, noting the urgency, decided to hear the appeals. The appellant had deposited 30% of the amount but failed to provide the bank guarantee. Respondent No.1 then ordered the transfer of funds from the appellant's bank accounts. The appellant challenged this order before the Single Judge, who dismissed the petitions, leading to the present appeals. The Court observed that all appeals were pending before the Tribunal, and the appellant had only deposited 30% of the amount. The bank accounts were frozen, and a substantial amount had already been transferred to Respondent No.1. The freezing of bank accounts was deemed excessive, especially since the Tribunal had not yet decided on the appeals. The Court issued directions to meet the ends of justice. It allowed the appellant to operate the bank account, instructed the Tribunal to decide on the appeals within three months, and stated that any future action under Section 45 of the KVAT Act would depend on the Tribunal's final decision. The Court directed that the order under Section 45 of the KVAT Act would not take effect until the Tribunal's decision. If any tax dues remained outstanding after the Tribunal's decision, Respondent No.1 could take action under Section 45, unless there was a higher forum's prohibitory order against tax recovery. The Court modified the Single Judge's order accordingly, disposed of the appeals, and did not award costs to any party.
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