2016 (9) TMI 613 - HC - VAT and Sales Tax

Attachment of 14 bank accounts - whether the attachment of bank account would not amount to harsh action against petitioner when the immovable properties are already attached and tax yet to be determined? - non-disclosure of certain facts - Held that - apart from conscious and blatant non-disclosure of most material facts by the petitioner which led the Court into passing of interim order, which but for such suppression the Court would not have passed, even otherwise in facts of the case the petitioner has not made out any case for interference. When the petitioner is in debt to nationalized banks to the tune of Hundreds of Crores of Rupees and when the department has also material to suggest that the petitioner had evaded payment of duty worth sizable amounts, the Commissioner was well within his rights to exercise power of provisional attachment under Section 45 of the Act - attachment of bank account justified - petition dismissed - decided against petitioner.

Summary

Issues:
Challenging attachment of bank accounts under Section 45 of the Gujarat Value Added Tax Act, 2003.

Analysis:
1. The petitioner, a company engaged in trading and manufacturing, challenged the attachment of its bank accounts by the Assistant Commissioner of Commercial Tax under Section 45 of the VAT Act based on communications dated 3.11.2015. The petitioner argued that the attachment was premature as VAT liability was yet to be ascertained through assessment, and such assessments would be subject to appeal and revisions, making the attachment harsh and detrimental to business operations.

2. The respondent authorities defended the attachment by stating that there were prima facie materials suggesting a tax demand of ?29.74 Crores for certain assessment years. They highlighted that the petitioner had mortgaged properties with nationalized banks for substantial credit facilities, including properties in Mumbai and Gota. The authorities justified the attachment of bank accounts to secure government dues, especially considering the petitioner's substantial debts and potential tax evasion.

3. The High Court examined the provisions of Section 45 of the VAT Act, which grants the Commissioner the power of provisional attachment to protect government revenue during assessment proceedings. The Court noted that when there are substantial arrears of tax dues, the Commissioner is justified in exercising such powers. The Court previously granted interim relief by lifting the attachment of bank accounts based on the petitioner's assertion regarding the value of the attached property in Mumbai, but subsequent revelations of substantial bank borrowings and non-disclosure of critical information led to the dismissal of the petition.

4. The Court found that the petitioner's deliberate non-disclosure of significant facts, such as extensive bank borrowings and ongoing recovery proceedings by nationalized banks, influenced the previous interim order. The petitioner's substantial debts to nationalized banks and potential tax evasion allegations supported the Commissioner's decision to attach bank accounts under Section 45 of the Act. Consequently, the petition was dismissed, and the interim relief was vacated, upholding the provisional attachment of the petitioner's bank accounts to safeguard government revenue interests.