2023 (2) TMI 887 - HC - VAT and Sales Tax

Stay of demand - Recovery of amount lying to the credit of the petitioner's bank account maintained with the second respondent bank and the said amount was debited from the petitioner's bank account - HELD THAT - Admittedly, a statutory appeal has been filed as against the assessment order dated 20.01.2021 passed under section 27 of the TNVAT Act by the petitioner which is under consideration by the Appellate Deputy Commissioner of Commercial Taxes and the petitioner has also paid the pre-deposit amount as required for filing the statutory appeal. The petitioner has also filed a stay petition seeking stay of the impugned assessment order. While that be so, the first respondent has recovered a sum of Rs.28,49,000/- from the amount lying in the petitioner's bank account maintained with the second respondent bank. The said amount covers the tax liability as determined by the first respondent in the assessment orders which is the subject matter of the appeal before the Statutory appellate authority. This Court after giving due consideration to the fact that the statutory appeal has already been filed by the petitioner by making statutory pre- deposit amount and the first respondent has also recovered the sum of Rs.28,49,000/- from the petitioner's bank account lying with the second respondent after filing of the statutory appeal by the petitioner, is inclined to grant stay of any further recovery from the petitioner either from the amount lying to the credit of the second respondent bank or from any other source till the statutory appeal, pending on the file of the newly impleaded third respondent is disposed of on merits and in accordance with law. Petition disposed off.

Summary

Issues:
Challenge to impugned proceedings for recovery of tax and penalty under TNVAT Act, 2006 despite pending statutory appeal and stay petition.

Analysis:
The petitioner challenged the impugned proceedings dated 13.02.2023 by the first respondent, which communicated to the second respondent bank about the due amount of Rs.40,96,402/- for arrears of tax and penalty under the TNVAT Act, 2006 for the years 2012-13 to 2016-17. The petitioner had filed a statutory appeal against the assessment order dated 20.01.2021 and made a pre-deposit before the Appellate Deputy Commissioner of Commercial Taxes. Despite the appeal and stay petition, the first respondent recovered Rs.28,49,000/- from the petitioner's bank account on 13.02.2023, causing the petitioner to challenge the recovery as arbitrary and illegal.

The High Court noted that the petitioner had filed a statutory appeal against the assessment order and paid the pre-deposit amount. However, the first respondent had already recovered a substantial sum from the petitioner's bank account. The petitioner feared that the penalty amount of Rs.20,48,201/- might also be recovered. The Court observed that when an appeal is pending, and the pre-deposit has been made, no further sums should be recovered. The Court, suo motu, impleaded the Appellate Deputy Commissioner of Commercial Taxes as the third respondent in the writ petition.

Considering the pending statutory appeal and the recovery made by the first respondent, the Court decided to grant a stay on any further recovery from the petitioner until the statutory appeal is disposed of by the newly impleaded third respondent. The Court directed the third respondent to pass final orders on the statutory appeal within twelve weeks. It ordered that no coercive steps should be taken against the petitioner for recovery based on the impugned proceedings dated 13.02.2023. The Court also instructed to lift any attachments on the petitioner's bank account and allowed the petitioner to operate the account with the second respondent bank. The judgment concluded by stating that no costs were to be incurred, and the connected miscellaneous petition was closed.