2016 (3) TMI 386 - HC - VAT and Sales Tax

Attachment of bank of account - Recovery of GVAT - section 45 of the Gujarat Value Added Tax Act, 2003 - During the pendency of the reassessment proceedings, the respondent / revenue attached the bank accounts of the petitioner. It is the case of the petitioner that he was never informed about such attachment and it was only when the petitioner visited the concerned bank that he came to know about the attachment of his bank accounts. - Held that - The learned Assistant Government Pleader, under instructions, submitted that in the light of the fact that the reassessment order had been passed the provisional attachment would no longer remain in force and, therefore, the concerned officer shall ensure that the attachment of the bank accounts of the petitioner shall be forthwith lifted. In the light of the statement made by the learned Assistant Government Pleader, the relief prayed for vide paragraph 15A would not survive. At the same time, as pointed out by the learned advocate for the petitioner, despite the pendency of the petitioner s appeal and stay application, the second respondent has withdrawn an amount of ₹ 4,07,000/- from the bank account of the petitioner. - in the absence of any exceptional circumstances, there is no warrant for the respondent authority to proceed to initiate coercive recovery in exercise of powers under section 44 of the Act. The second respondent is hereby restrained from making any further coercive recovery from the petitioner till the stay application filed by the petitioner is heard and decided - Decided partly in favor of appellant.

Summary

Issues:
1. Validity of attachment of bank accounts under section 45 of the GVAT Act during reassessment proceedings.
2. Coercive recovery by debiting the petitioner's bank account despite pending appeal and stay application.

Issue 1: Validity of attachment of bank accounts under section 45 of the GVAT Act during reassessment proceedings

The judgment pertains to a petition challenging the attachment of bank accounts by the Assistant Commissioner of Commercial Tax under section 45 of the Gujarat Value Added Tax Act, 2003. The petitioner, a proprietary concern, was assessed for 2009-10 and 2010-11 and paid the demanded amounts. Subsequently, the petitioner was issued reassessment notices and during this process, the bank accounts were attached without prior notification. The reassessment orders were passed, yet the attachment continued. The petitioner appealed with a stay application, but coercive recovery actions were taken, debiting the account. The petitioner argued that coercive measures should have been stayed pending the appeal decision.

Issue 2: Coercive recovery by debiting the petitioner's bank account despite pending appeal and stay application

The petitioner contended that the respondents should have awaited the outcome of the stay application before resorting to coercive recovery measures. The Assistant Government Pleader defended the actions under section 45 of the GVAT Act, stating that the provisional attachment was in line with the law. However, upon the reassessment order, the attachment should have been lifted. The court held that despite the reassessment order, coercive recovery actions were unwarranted when an appeal and stay application were pending. The court restrained further coercive recovery until the stay application was decided, emphasizing the need for authorities to act reasonably during such proceedings.

In conclusion, the court allowed the petition to the extent of withdrawing the attachment on the bank accounts and restraining the second respondent from making further coercive recoveries until the stay application was heard and decided. The judgment highlighted the importance of following due process and acting reasonably during tax assessment and recovery proceedings, emphasizing the rights of the petitioner in such situations.