2017 (7) TMI 927 - HC - VAT and Sales Tax

Recovery of tax arrears - attachment of the petitioner s residential-cum-office premises - collection of post dated cheques from the petitioner - Held that - we find that the powers under section 45(1) of the Act have been delegated to the Commercial Tax Officer. We may record that sub-section (6) of Section 16 authorizes the Commissioner to delegate his powers under the Act into the Deputy Commissioner, Assistant Commissioner, Commercial Tax Officer or other officer within his jurisdiction. The first challenge of the petitioner to the attachment of the immovable property, therefore, cannot be accepted. Collection of post dated cheques - Held that - There is no authority in law in which the tax authorities can forcibly collect post dated cheques. Under the circumstances, the respondents are directed to not present the post dated cheques collected from the petitioner for realisation and return the said cheques. We make it clear that in present case, the raid was carried out on 02.05.2017, when the cheques were collected and the petition was filed promptly on 08.05.2017 without any loss of time. This would, therefore, demonstrate the petitioner s bona fides. Petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenging the attachment of residential-cum-office premises and collecting post-dated cheques for alleged tax arrears.

Analysis:
1. Attachment of Property: The petitioner challenged the attachment of the property by the Commercial Tax Officer under Section 45 of the Value Added Tax Act, arguing that such powers should have been exercised by the Commissioner of Commercial Tax. However, it was revealed that the Commissioner had delegated the powers under Section 45(1) of the Act to the Commercial Tax Officer as per an order issued on 01.04.2006. The delegation of powers to the Commercial Tax Officer was found to be valid under sub-section (6) of Section 16, allowing the Commissioner to delegate powers to specified officers. Thus, the challenge to the attachment of the property was dismissed.

2. Forcible Collection of Post-Dated Cheques: The petitioner contended that post-dated cheques were forcibly obtained by the raiding officers, which was unauthorized. The Commercial Tax Officer, in an affidavit, stated that the petitioner had voluntarily acknowledged his tax and interest liabilities and had given post-dated cheques towards the same. However, the court criticized the practice of raiding officers forcibly collecting post-dated cheques for unascertained tax liabilities. It was noted that no assessment had been made containing the demand for the period under consideration, making it implausible for the petitioner to voluntarily agree to such payments. The court directed the authorities not to present the post-dated cheques for realization and ordered their return to the petitioner. The court emphasized the importance of prompt legal action, as demonstrated by the petitioner filing the petition promptly after the raid. It was highlighted that the court may consider the timing of legal action when assessing the voluntariness of giving post-dated cheques in future cases.

3. Conclusion: The petition was disposed of with the direction to return the post-dated cheques to the petitioner and refrain from presenting them for realization. The judgment underscored the importance of legal procedures and criticized the practice of forcibly collecting post-dated cheques without a proper assessment of tax liabilities.