2017 (2) TMI 418 - HC - VAT and Sales Tax

Garnishee proceedings - Section 45(1)(b) of the Tamil Nadu Value Added Tax Act - attachment of bank account - Held that - When the garnishee order has been issued subsequent to the appropriation of the entire sale proceeds, the appellant has to proceed against the dealer independently, as no proceeds remain left with the CFS Agency - the attachment of the Bank Account of the first respondent for the dues of the dealer is unsustainable in law - appeal dismissed.

Summary

Issues:
Challenging order passed by Single Judge in W.P. No.17145 of 2015.
Appropriation of cargo by first respondent.
Recovery of dues and attachment of bank account.
Issuance of garnishee order after appropriation of sale proceeds.

Analysis:
The Writ Appeal was filed to challenge an order dated 15.07.2015 passed by the learned Single Judge in W.P. No.17145 of 2015. The cargo belonging to the second respondent was lying at the CFS facility of the first respondent since 17.06.2013. Despite notices issued under Section 48 of the Customs Act, the second respondent did not clear the cargo. Subsequently, the first respondent sold the cargo to M/s.New Golden Steels through an E-auction on 28.11.2014, complying with Section 150 of the Customs Act.

The petitioner issued notices for the recovery of dues, leading the first respondent to seek a direction for the return of unlawfully appropriated funds. The Single Judge observed that the attachment of the bank account of the first respondent was erroneous and lacked proper application of mind by the appellant. A garnishee order was issued after the sale proceeds had already been appropriated, making it improper to invoke Section 45(1)(b) of the Tamil Nadu Value Added Tax Act.

The Customs Act's Section 150 outlines the procedure for the sale of goods and the application of sale proceeds. As the garnishee order came after the sale proceeds were appropriated, the appellant should have pursued action against the dealer independently since no proceeds were left with the CFS Agency. Therefore, the attachment of the first respondent's bank account for the dealer's dues was deemed legally unsustainable. Consequently, the learned Single Judge's order was upheld, and the appeal was dismissed.