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2017 (10) TMI 183 - HC - VAT and Sales TaxAttachment of bank accounts, stock and Finished Goods - it was alleged that the petitioner is engaged in the bogus billing activities and had been dealing with purchasers whose registration have been cancelled - Section 45 of the VAT Act - Held that - Sub-section (2) of section 45 of the Act, in plain terms, ensures that the life of a provisional attachment order does not extend beyond a period of one year. Therefore, unless the order of provisional attachment is withdrawn, recalled, set aside or merges into some final order earlier, the same would cease to have effect at the end of a period of one year - the impugned orders of attachment were passed on 07.09.2016 and 08.09.2016. In terms of sub-section (2) of section 45, therefore they would become ineffective - appeal allowed.
Issues: Provisional attachment of property under section 45 of the VAT Act.
Analysis: The petitioner, a timber dealer, had their stock, bank accounts, and fixed assets attached by the respondent authorities under section 45 of the VAT Act due to alleged involvement in bogus billing activities. The authorities estimated the petitioner's tax liabilities to be around ?3.03 crores. Section 45 of the VAT Act empowers the Commissioner to provisionally attach a dealer's property during assessment or reassessment proceedings to safeguard government revenue interests. The provisional attachment ceases to be valid after one year from the date of the order. The provision ensures that such attachments do not continue indefinitely, unless withdrawn, recalled, set aside, or merged into a final order earlier. The statutory provision does not prohibit the issuance of fresh attachment orders. Even if the authority deems it necessary to continue the attachment, a fresh order must be passed. This requirement ensures a periodic review of the situation and a fresh decision based on the current circumstances to protect government revenue interests. In the present case, the orders of attachment issued on 07.09.2016 and 08.09.2016 became ineffective in accordance with sub-section (2) of section 45 of the VAT Act. The court declared the orders invalid, leading to the disposal of the petition.
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