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2023 (9) TMI 1249 - HC - VAT and Sales TaxProvisional attachment of Bank Accounts - validity of notice being an intimation under Section 38 of the Maharashtra Value Added Tax Act, 2002 - HELD THAT - Section 35 of the MVAT Act pertains to provisional attachment to protect revenue in certain cases. The same was issued more than a year back, hence, such provisional attachment stands automatically revoked by operation of law by virtue of the provisions of sub-section (2) of Section 35 of the MVAT Act, which mandates that every provisional attachment shall cease to have an effect after the expiry of one year from the date of the service of an order issued under Sub-section (1) - there are no order, whereby the proviso below sub-section (1) was invoked and/or for any reasons to be recorded in writing, the period of one year as contained in the order was in any manner and as permissible in law was extended. Thus, in our opinion, by operation of law, the provisional attachment of all demat accounts has come to an end. The interest of justice would require to stay the impugned notice dated 11th April 2022, issued by the Respondents under Section 38 of the MVAT Act against the Petitioner - the provisional attachment of the Demat Accounts of the Petitioner and his family members has lapsed by virtue of the provisions of Subsection (2) of Section 35 of the MVAT Act. List the matter on 15th September 2023, High on Board.
Issues Involved:
1. Challenge to notice under Section 38 of MVAT Act 2. Freezing of demat accounts Issue 1: Challenge to notice under Section 38 of MVAT Act The petition challenged a notice dated 11th April 2022 issued to the Petitioner by the Sales Tax Officer, Nodal Division Mumbai-2, under Section 38 of the Maharashtra Value Added Tax Act, 2002 (MVAT Act). The notice indicated a MVAT liability against the Petitioner as a Director of Ananta Impex Pvt. Ltd. and/or Mapro Ventures Ltd. for specific periods, totaling to Rs. 1,68,17,661. The Petitioner contended that for the first period, he had resigned as Director before the liability period, and for the second period, the returns were filed post his resignation. The court observed that the notice was issued without proper verification of facts and stayed the notice, finding it untenable to be issued against the Petitioner as a former Director. Issue 2: Freezing of demat accounts The Sales Tax Officer had issued a notice dated 9th June 2021 leading to the freezing of demat accounts of the Petitioner and family members with ICICI Bank. The freezing was based on a communication to NSDL, affecting multiple demat accounts. The Petitioner argued that the freezing was illegal, especially considering the events post his resignation as Director. The court noted that the provisional attachment of demat accounts automatically ceased after one year from the date of the order, which was not extended as required by law. Consequently, the court ordered that the provisional attachment had lapsed and directed the Respondents to file a reply affidavit within a week. In conclusion, the court stayed the notice issued under Section 38 of the MVAT Act against the Petitioner, finding it unjustified and ordered the lapse of the provisional attachment of demat accounts. The Respondents were directed to file a reply affidavit within a week, and the matter was listed for further hearing. The court clarified that the department could take lawful actions for recovering MVAT dues from the concerned entities and their current Directors.
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