2019 (1) TMI 306 - HC - VAT and Sales Tax

Validity of attachment order - stay application pending before the Tribunal - stay granted against recovery of the amount in connection with the demand raised - Held that - Nothing has been pointed out to this court to establish that the stay application was not decided expeditiously by the Tribunal on account of any default on the part of the petitioner. Moreover, the petitioner has already deposited the tax component of the demand. In the absence of any exceptional circumstances having been made out, there was no warrant on the part of the respondents to initiate coercive recovery against the petitioner by attaching his immoveable properties - the decision in the case of Automark Industries (I) Ltd. v. State of Gujarat 2015 (11) TMI 1016 - GUJARAT HIGH COURT is squarely applicable to the facts of the present case, where it was held that the respondents should stay their hands till the stay application is decided, unless the stay application is not decided on account of default on the part of the petitioner or it is found that the petitioner is unnecessarily delaying the hearing of the stay application. Whether after the Tribunal had granted stay against recovery of the amount in connection with the demand raised, whether it is permissible for the respondents to continue with the attachment made vide the impugned order dated 03.10.2013? - Held that - Since the Tribunal has only granted stay against recovery, the respondents are not required to lift the attachment on the property in question. In this regard, a perusal of the provisions of the Gujarat Value Added Tax Act, 2003 shows that the powers exercised by the respondents while attaching the property of the petitioner are relatable to section 46 thereof, which makes provision for special powers of tax authorities for recovery of tax as arrears of land revenue. Since the powers exercised by the respondents are under section 155 of the Code, it evident that the same is in the nature of recovery proceedings. Therefore, once the Tribunal had stayed the recovery by virtue of its order dated 24.01.2014, the respondents were bound to respect such orders and lift the attachment on the properties of the petitioner made vide the impugned order. Since, the attachment is part of recovery proceedings, the contention that there is no recovery and/or attachment, cannot be countenanced. The respondents are directed to forthwith lift the attachment on the property in question of the petitioner and any proceedings taken subsequent thereto, including any entry having been made in the revenue record in relation to such attachment - Petition allowed.

Summary

Issues involved:
1. Justification of attachment order during the pendency of a stay application.
2. Permissibility of continuing with an attachment after the Tribunal granted a stay against recovery.

Detailed Analysis:

Issue 1: Justification of attachment order during the pendency of a stay application

The petitioner challenged an attachment order dated 03.10.2013 by the Commercial Tax Officer-1 under section 155 of the Bombay Land Revenue Code, 1879. The petitioner had appealed against a demand of tax, penalty, and interest confirmed by the Joint Commissioner of Commercial Tax. During the pendency of the appeal and a stay application before the Gujarat Value Added Tax Tribunal, the Commercial Tax Officer issued the impugned attachment order. The petitioner argued that the attachment, being part of recovery proceedings, was invalid as it was made during the pendency of the stay application. Citing the Automark Industries case, the petitioner contended that coercive recovery should not proceed unless exceptional circumstances exist. The petitioner had already deposited the tax component, and the Tribunal had granted a stay against recovery. Therefore, the attachment during the pendency of the stay application was deemed unjustified.

Issue 2: Permissibility of continuing with an attachment after the Tribunal granted a stay against recovery

The respondents justified the attachment, stating it was made before the Tribunal granted a stay against recovery. They argued that the attachment was necessary to safeguard the amount payable towards penalty and interest. The respondents expressed concerns that lifting the attachment might allow the petitioner to dispose of the property, hindering future recovery efforts. However, the Tribunal's stay against recovery implied that coercive measures, including the attachment, should cease. The Gujarat Value Added Tax Act, 2003, empowered tax authorities to attach property for recovery under section 46, akin to the Bombay Land Revenue Code, 1879. As the attachment was part of recovery proceedings under section 155 of the Code, continuing with the attachment post the Tribunal's stay order was deemed impermissible. The Court ruled in favor of the petitioner, quashing the impugned attachment order and directing the respondents to lift the attachment promptly, including any related entries in revenue records.

In conclusion, the Court allowed the petition, emphasizing that once a stay against recovery was granted, the attachment should be lifted. The judgment highlighted the importance of respecting stay orders and ensuring fairness in recovery proceedings.