2021 (1) TMI 263 - HC - VAT and Sales Tax

Validity of Recovery Notice issued after the Best Judgment Assessment order - Defreezing of Bank Accounts - Section 9(2) of the Central Sales Tax Act, 1956 - HELD THAT - After the impugned Recovery Notice is issued, pursuant thereto approximately 10% of the demand has been recovered. Therefore, it would be just and reasonable to quash the impugned Recovery Notice with liberty to the authorities to initiate appropriate action for refund of the amount recovered once the petitioner s appeal is decided on merits by the appellate authority. This Court is of the view that the petition could be disposed of directing the respondents not to take any precipitous action for the next ten working days and to issue appropriate Communication to the petitioner s banker to de-freeze the account subject to further orders that could be made in the event the petitioner does not file an appeal within the next ten working days. Petition disposed off.

Summary

Issues:
Challenge to Recovery Notice under the Central Sales Tax Act, 1956 after Best Judgment Assessment order.

Analysis:
The petitioner filed a petition challenging the Recovery Notice issued after a Best Judgment Assessment order under Section 9(2) of the Central Sales Tax Act, 1956. The petitioner sought to withdraw an application for rectification and pursue the appeal remedy, intending to file an appeal within the next ten working days. Approximately 10% of the demand had been recovered following the Recovery Notice. The petitioner requested the impugned Recovery Notice to be quashed, with authorities having the liberty to initiate appropriate action for refund once the appeal is decided by the appellate authority.

The learned Additional Government Advocate submitted that even if the appeal is not filed within the initial thirty days, the petitioner could still file an appeal within a further period, making a pre-deposit as required by the Act. It was clarified that the Act does not prevent the initiation of action for refund if the petitioner succeeds in the appeal process.

Considering the circumstances, the Court directed the respondents not to take immediate action for the next ten working days. Additionally, an appropriate communication was to be issued to the petitioner's banker to de-freeze the account, subject to further orders if the appeal is not filed within the specified period. The writ petition was disposed of accordingly, allowing time for the petitioner to pursue the appeal remedy within the stipulated timeframe.