2015 (5) TMI 30 - HC - VAT and Sales Tax

Non payment of the amount of the Value Added Tax under Jharkhand Value Added Tax Act, 2005 - Recovery of tax under Section 46 - Held that - It is a duty of the State -within the meaning of the Article 12 of the Constitution of India, not to infructuous the efficacious alternative remedy. It is constitutional duty of every State -within the meaning of Article 12 of the Constitution of India that if any assessee is availing statutory remedy by way of appeal or revision, the low ranking officer should not make appeal or revision infructuous. - there was no need of the Assessing Officer to take a recourse under section 46 of the Jharkhand Value Added Tax Act, 2005 for recovery of the money from the nationalized bank as per the order dated 10th December, 2014 at Annexure- 8 and it is expected from the very same Assessing Officer that such type of mistakes will not be repeated henceforth. As the amount has already been recovered we are restraining ourselves from passing an order of refund, but, we hereby direct the Commissioner, Commercial Taxes to decide the appeal preferred by this petitioner within a period of four weeks from the date of receipt of the copy of the order passed by this Court. - It is high time for the State either to change the Assessing Officer or Commissioner, Commercial Taxes because none of them can make assessee s appeal or revision infructuous and can encash the amount lying in the nationalized bank in the manner in which this Assessing Officer has realized the money. - Appeal disposed of.

Summary

Issues Involved:

1. Legality of the attachment order dated 10th December 2014.
2. Conduct of the Assessing Officer in passing ex-parte orders.
3. Petitioner's compliance with tax obligations.
4. Appeal and revision processes under the Jharkhand Value Added Tax Act, 2005.
5. Precedents and guidelines for tax recovery.

Issue-wise Detailed Analysis:

1. Legality of the attachment order dated 10th December 2014:

The petitioner challenged the order passed by the respondent on 10th December 2014, which attached the petitioner's bank accounts for non-payment of Value Added Tax (VAT) under the Jharkhand Value Added Tax Act, 2005, for the months of May, June, and July 2014. The court quashed and set aside the attachment order, noting that the petitioner had already filed a revision application and a stay application before the Commissioner, Commercial Taxes. The court emphasized that the Assessing Officer should not have hurriedly passed the attachment order, especially when the judgment in the revision application was reserved.

2. Conduct of the Assessing Officer in passing ex-parte orders:

The petitioner argued that the Assessing Officer had a habit of passing ex-parte orders and attaching bank accounts without proper consideration of the provisions of the Jharkhand Value Added Tax Act, 2005. The court noted that similar ex-parte orders for previous periods (January, February, March, and April 2014) had been quashed by the Commissioner, Commercial Taxes, who had also provided further guidance to the Assessing Officer. The court criticized the repeated mistakes by the Assessing Officer and emphasized that such conduct should not continue.

3. Petitioner's compliance with tax obligations:

The petitioner, a limited company, was described as a regular taxpayer, paying substantial amounts of tax to both the Central and State Governments. The court recognized that the petitioner was not a "fly-by-night" company and had consistently complied with tax obligations. The court highlighted that the petitioner's significant tax contributions should have been considered by the Assessing Officer before passing the attachment order.

4. Appeal and revision processes under the Jharkhand Value Added Tax Act, 2005:

The court noted that the petitioner had availed the statutory remedy by filing a revision application and a stay application before the Commissioner, Commercial Taxes. The court emphasized that the Assessing Officer should have waited for the judgment in the revision application before taking coercive measures like attaching bank accounts. The court also referenced Section 79 of the Jharkhand Value Added Tax Act, 2005, which allows for an appeal within 30 days from the date of receipt of the order.

5. Precedents and guidelines for tax recovery:

The court referred to the judgment of the Bombay High Court in The Director of Income Tax (Exemption), Mumbai vs. The Income Tax Appellate Tribunal Mumbai Branch & Anr., which provided guidelines for tax recovery. The court emphasized that no recovery should be made before the expiry of the time limit for filing an appeal and that reasonable prior notice should be given before withdrawing amounts from attached bank accounts. The court criticized the undue haste of the Assessing Officer in recovering the tax amount and highlighted the need for fair treatment of taxpayers.

Conclusion:

The court quashed the attachment order dated 10th December 2014 and directed the Commissioner, Commercial Taxes, to deliver the judgment in the revision application within four weeks. The court emphasized the need for proper guidance to Assessing Officers to prevent similar errors in the future and suggested that the State consider changing the Assessing Officer or the Commissioner, Commercial Taxes, to ensure fair treatment of taxpayers. The writ petition was disposed of with these observations.