2017 (10) TMI 489 - HC - VAT and Sales Tax

Attachment of Bank Account - provisional attachment - Held that - Sub-section (2) of Section 45, however, provides that every such provisional attachment shall cease to have effect after expiry of one year from the date of the order - In the present case, this period of one year is over long back. It is, therefore, declared that the order dated 13.07.2016 is no longer effective. Refund of amount recovered by the respondents from the petitioner s bank account - Held that - admittedly, no assessment was framed before affecting such recovery. The recovery is also affected without the petitioner s consent and directly from the bank. The respondents shall refund the said sum of ₹ 1,63,000/- at this stage without interest to the petitioner. However, if under the order of assessment any further liability arises, the period during which the amount remained with the department would incur statutory interest in favor of the petitioner. Petition disposed off.

Summary

Issues:
1. Setting aside an order attaching the petitioner's bank account.
2. Refund of a sum recovered from the petitioner's bank account.

Setting aside the order attaching the bank account:
The petitioner, a registered company under the Gujarat Value Added Tax Act, had its bank account attached by the Commercial Tax Officer due to the cancellation of the registration of a vendor from whom goods were purchased. The petitioner argued that the cancellation of the vendor's registration should not automatically disallow input tax credit and that no assessment order had been passed yet. The court noted that provisional attachment under Section 45 of the VAT Act ceases to have effect after one year from the date of the order. As this period had elapsed, the order attaching the bank account was declared ineffective.

Refund of the recovered sum:
The respondent authorities had recovered a sum from the petitioner's bank account without a formal assessment or consent. The court held that this unilateral recovery was impermissible. The court ordered the respondents to refund the recovered sum to the petitioner without interest. However, if any further liability arises under the assessment order, the period during which the amount remained with the department would accrue statutory interest in favor of the petitioner. The judgment clarified that nothing in the order would prejudice either party in the pending assessments, and the petition was disposed of accordingly.