2022 (5) TMI 3 - HC - VAT and Sales Tax

Provisional Attachment of Bank Accounts - no demand of pre-deposit to be made - powers under Section 44 of the VAT Act - HELD THAT - There need not be any adjudication of the present writ application in details in view of the order passed by the Gujarat Value Added Tax Tribunal at Ahmedabad dated 14th March 2022. The appeals filed by the writ applicant herein are now to be heard on their own merits by the first appellate authority. As on date, there are no proceedings pending on the strength of which Section 45 of the Act can even be invoked. Section 45 is with respect to the provisional attachment. Section 45 can be invoked during the pendency of any proceeding of assessment or re-assessment. The assessment has already been undertaken. Section 44 of the Act will also have no application because Section 44 is with respect to the special mode of recovery and it is more in the nature of a garnishee provision. Section 46 confers special powers upon the tax authorities for recovery of tax as arrears of the land revenue. This provision also will have no application at this point of time. In view of the specific order passed by the Tribunal that the recovery proceedings shall continue to remain stayed till the final disposal of the first appeals, the attachment of the current bank account of the company maintained with the State Bank of India cannot operate any further - the impugned order of attachment passed by the State Tax Officer (4), Unit 6, Ahmedabad is hereby quashed and set aside - Application disposed off.

Summary

Issues:
- Writ application under Article 226 seeking relief from attachment on bank account
- Company's appeal against assessment under VAT Act and CST Act
- Tribunal's order remanding the matter to the first appellate authority
- Legality of the attachment under Section 44 of the VAT Act

Analysis:
1. The writ applicant sought relief through a writ application under Article 226 to lift the attachment on their bank account and quash the impugned notice. The company, registered under the VAT Act, was assessed for the period 2015-16, leading to a significant demand raised against them under the VAT and CST Acts. Appeals were filed, and a pre-deposit was made, with a stay granted against recovery. However, the appeals were eventually dismissed ex parte.

2. The company then appealed before the VAT Tribunal, which remanded the matter to the first appellate authority for fresh hearing. The Tribunal allowed the appeals, quashed the orders of the first appellate authority, and directed a fresh hearing without any pre-deposit requirement. The Tribunal also instructed the first appellate authority to hear the appeals on their merits and continue the stay against recovery proceedings.

3. The High Court analyzed the legality of the attachment on the company's bank account under Section 44 of the VAT Act. Given the Tribunal's order staying recovery proceedings until the final disposal of the appeals, the Court found that the attachment could no longer be operative. Section 45, relating to provisional attachment during assessment proceedings, and Section 46, conferring special recovery powers, were deemed inapplicable at that stage.

4. Consequently, the Court quashed and set aside the impugned attachment order dated 3rd February 2022, directing the first appellate authority to proceed with hearing the appeals on their merits. With no pending proceedings warranting the attachment, the Court disposed of the writ application in favor of the company, emphasizing the need for the first appellate authority to adjudicate the appeals independently.

This detailed analysis covers the issues addressed in the judgment, highlighting the legal proceedings, Tribunal's decision, and the High Court's evaluation of the attachment's legality under the VAT Act.