2016 (11) TMI 169 - HC - VAT and Sales Tax

Permission to operate bank account - provisional attachment of bank property in terms of section 45(1) of the VAT Act - when presently no enforceable demand of the petitioner exists, can department attach the bank account? - limitation period - provisional attachment would not extend beyond a period of one year from the date of order - Held that - learned AGP did not controvert that after 12.2.2014, no extension of fresh order of attachment was passed. He also could not controvert that by virtue of the interim order and the final order passed by the VAT Tribunal presently, it would not be possible for the department to recover any further tax dues from the petitioner, the petitioner having fulfilled the condition of predeposit - no hesitation in declaring that the petitioner would be free to operate the said bank account. The order of attachment has in any case expired with afflux of time. Even otherwise, it is doubtful whether the department could take any coercive action when no dues of a dealer exist - petition disposed off - decided in favor of petitioner.

Summary

Issues:
1. Direction to permit the petitioner to operate the bank account.

Analysis:
The petitioner, a trader registered under the Value Added Tax Act, had his bank account provisionally attached by the VAT authorities due to outstanding tax demands. The petitioner challenged the assessment orders for the periods 2010-2011 and 2011-2012, with interim stays granted by the VAT Tribunal upon depositing specified amounts. The Tribunal remanded the proceedings for the year 2011-2012 to the first appellate authority while clarifying that the stay granted earlier would continue. The provisional attachment of the bank account, dated 12.2.2013, was argued by the petitioner to be invalid as no fresh attachment was made after 12.2.2014. The petitioner contended that with no enforceable demand currently existing, the department had no basis to attach the bank account.

The learned Additional Government Pleader did not dispute that no fresh attachment orders were issued after 12.2.2014. It was also acknowledged that due to the interim and final orders by the VAT Tribunal, the department could not recover any further tax dues from the petitioner as the predeposit condition had been fulfilled. The court, considering these facts, declared that the petitioner should be allowed to operate the bank account freely, as the attachment order had expired with time. Moreover, the court expressed doubts about the department's ability to take coercive action when no dues were outstanding from the dealer.

In conclusion, the petition was disposed of accordingly, permitting direct service and allowing the petitioner to operate the bank account without any restrictions.