2020 (2) TMI 301 - HC - VAT and Sales Tax

Attachment of Bank Accounts - appeal and stay petition for extention were pending- whether the respondent no.4 could be said to be justified in ordering attachment of the bank accounts of the writ -applicant and in directing the respondent no.5 bank to withdraw the amount and credit the same in the government treasury? HELD THAT - We fail to understand that although this Court clarified vide order dated 01.05.2019 that the pendency of this petition shall not preclude the appellate authority from deciding the application for extension of stay made by the writ -applicant, yet why no such order has been passed till this date. In fact, by this period of time, the appeal itself could have been heard and disposed of - It is not in dispute that the stay order is of the year 2013. It was extended last up to June 2017. Thereafter, there does not seem to be any extension. The action on the part of the respondent no.4 in attaching the bank accounts of the writ -applicant pending the appeals before the appellate authority is not justified. The Department has a bank guarantee as on date of ₹ 1 crore - the appellate authority should proceed immediately with the hearing of the appeals with an understanding that till the final disposal of the appeals, there shall be no coercive recovery of the amount demanded. Application disposed off.

Summary

Issues:
1. Validity of assessment order dated 31.03.2013
2. Legality of impugned letter dated 20.11.2018
3. Extension of stay pending disposal of appeal
4. Justification of attaching bank accounts
5. Coercive recovery by respondent no.4

1. Validity of assessment order dated 31.03.2013: The writ-application challenged an assessment order passed by the State Tax Officer for the years 2007-08 and 2008-09, confirming liabilities under the GVAT Act and CST Act along with penalties. The High Court previously declined to entertain the writ-application due to alternative remedies available. The writ-applicant appealed these orders, leading to directions from the appellate authority to make pre-deposits and provide bank guarantees. Despite extensions of stay, the respondent no.4 directed the bank to issue demand drafts for alleged dues, prompting the current writ-application.

2. Legality of impugned letter dated 20.11.2018: The respondent no.4's action of directing the bank to withdraw amounts from the writ-applicant's account was challenged. The High Court issued interim orders restraining withdrawals from the attached bank accounts. The Court noted the pendency of the writ-application should not hinder the appellate authority from deciding on the extension of stay. The respondent's decision to attach the accounts was questioned, especially considering the existing bank guarantee.

3. Extension of stay pending disposal of appeal: The writ-applicant repeatedly sought extensions of the stay order, with the last extension granted until 30.06.2017. Despite ongoing appeals and valid bank guarantees, no further extensions were granted. The High Court emphasized the need for immediate hearing and disposal of the appeals without coercive recovery until final decisions were reached.

4. Justification of attaching bank accounts: The respondent no.4's decision to attach the bank accounts of the writ-applicant during the appeal process was deemed unjustified by the High Court. The Court highlighted the presence of a substantial bank guarantee and directed the appellate authority to proceed with the appeal hearings promptly, ensuring no coercive recovery until final determinations were made.

5. Coercive recovery by respondent no.4: The High Court quashed and set aside the impugned letter dated 20.11.2018 issued by the State Tax Officer, Unit-6, Ahmedabad. The Court directed the appellate authority to expedite the appeal hearings and dispose of them within two months from the date of the current order. The judgment concluded by disposing of the writ-application in the mentioned terms, emphasizing the importance of timely appeal resolution and avoidance of coercive recovery measures.