2019 (8) TMI 668 - HC - VAT and Sales Tax

Imposition of penalty of over ₹ 11.05 lakhs - Section 27(1) of TNVAT Act - attachment of bank account of petitioner - HELD THAT - This Court is of the considered view that in the light of the undisputed position as it unfurls in the hearing today, without expressing any view on the merits of the matter, writ petition can be disposed of by passing an order whereby the assessee gets a breather and the interest of Revenue is also protected. It is not in dispute that with regard to penalty liability of little over ₹ 11.05 lakhs of G.Jayabal i.e., ₹ 11,05,037/- to be precise, a sum of ₹ 1,51,038/- has already been debited from the bank account of the writ petitioner Company and the same has been paid out to the Department. In addition to this, the writ petitioner Company will now pay 25% of the penalty amount of ₹ 11,05,037/- to the first respondent - For the balance after giving credit to the aforesaid ₹ 1,51,038/- and 25%, a personal bond shall be provided by the deponent of the aforesaid affidavit filed in support of the instant writ petition. On the aforesaid payment being made and a bond being furnished in appropriate format as required by the Department, the impugned attachment order will stand raised. - petition disposed off.

Summary

Issues:
1. Attachment of bank account of a company for penalty liability of one of its directors under TNVAT Act.
2. Validity of impugned attachment order issued by the first respondent.
3. Dispute regarding the liability of the company for the penalty imposed on the director.
4. Resolution of the matter to protect the interests of both the assessee and the Revenue.

Issue 1: Attachment of bank account of a company for penalty liability of one of its directors under TNVAT Act:
The case involved the attachment of the bank account of a company, a juristic person, for the penalty liability of one of its directors under the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act). The penalty was imposed on the director, and the company's account was attached by the first respondent, leading to a dispute over the attachment's validity.

Issue 2: Validity of impugned attachment order issued by the first respondent:
The impugned attachment order was issued by the first respondent to the bank where the company held an account. The company argued that its account, being a separate entity, should not be attached for the penalty owed by one of its directors, who was a natural person. The Revenue Counsel, however, cited Section 45(1)(a) of the TNVAT Act to support the attachment order, emphasizing that the order was permissible under the law.

Issue 3: Dispute regarding the liability of the company for the penalty imposed on the director:
The company contended that it should not be held liable for the penalty imposed on its director, who was a dealer under the TNVAT Act. The court noted that the company was a separate legal entity and that the penalty was related to the director's individual liability. The resolution of this issue was crucial in determining the company's responsibility for the penalty amount.

Issue 4: Resolution of the matter to protect the interests of both the assessee and the Revenue:
The court, after considering the submissions from both parties, decided to dispose of the writ petition by issuing specific directions. The court ordered the company to pay a portion of the penalty amount and provide a personal bond for the remaining balance. Upon compliance with the court's directives, the impugned attachment order would be lifted, ensuring that the interests of both the assessee and the Revenue were safeguarded.

In summary, the judgment addressed the attachment of a company's bank account for the penalty liability of one of its directors under the TNVAT Act. The court analyzed the validity of the attachment order, the company's liability for the penalty, and provided a resolution to protect the interests of both parties involved. The court's decision outlined specific directions for the company to follow to resolve the matter effectively.