2019 (3) TMI 1143 - HC - VAT and Sales Tax

Power of tax authorities for Recovery of tax as arrears of land revenue - Restriction on movement or transfer of machinery or fixed assets - SARFAESI Act - pending dues - attachment of subject property - Auction - GVAT Act - Held that - Section 46 of the GVAT Act makes it clear that it permits the officer concerned to recover pending tax dues arising out of an order made under that Act by exercising powers under the Bombay Land Revenue Code, 1879. In the present case, a bare perusal of the contents of the communication dated 2.6.2015, makes it evident that the same is not relatable to any power exercised under the Bombay Land Revenue Code as envisaged under section 46 of the GVAT Act. In fact, the impugned communication is totally silent as regards the source of power under which the same has been issued. It appears that merely by dint of the fact that the officer concerned is the Commercial Tax Officer, he seems to have addressed the impugned communication to the Kandla SEZ Authority, not to allow movement or transfer of machinery or fixed assets of the respondent No.4 herein. The impugned communication dated 2.6.2015 which lacks any authority of law and has no legal force is, therefore, non-est and is required to be ignored - the third respondent, Joint Development Commissioner, Kandla Special Economic Zone, Gandhidham Kutchh, is directed to not to act upon the same to restrain the petitioner in dealing with the property in question - petition allowed.

Summary

Issues:
Challenge to communication dated 2.6.2015 by Commercial Tax Officer restricting movement of assets due to pending tax dues.

Analysis:
1. The petitioner challenged a communication dated 2.6.2015 by the Commercial Tax Officer, Gandhidham, restricting movement or transfer of assets of a company due to pending tax dues. The petitioner sought relief only for a specific prayer mentioned in the petition.

2. The petitioner, a bank, had advanced credit to a company which defaulted. The bank initiated proceedings under the Securitisation Act, taking over the company's properties. Subsequently, the bank applied for debt recovery. The Commercial Tax Officer's communication restricted asset movement due to tax dues, leading to the petition.

3. The Commercial Tax Officer's communication lacked legal basis according to the petitioner. The officer's authority to issue such an order was questioned, as the source of power for the communication was not specified, making it necessary to quash the communication.

4. The Assistant Government Pleader defended the communication citing section 46 of the Gujarat Value Added Tax Act, empowering tax authorities for revenue protection. However, the communication's legal standing was challenged due to lack of clarity on the source of power.

5. The court analyzed section 46 of the GVAT Act, noting it allows recovery of tax dues under specific conditions. The impugned communication did not align with the powers granted under the Act, rendering it legally insufficient and non-binding.

6. The court held that the communication lacked legal authority and had no force, being merely a letter without statutory backing. The Kandla SEZ Authority was not obligated to act on it, as it was not issued under any statutory powers vested in the Commercial Tax Officer.

7. Consequently, the court allowed the petition, declaring the communication non-binding and directing the Kandla SEZ Authority not to restrict the petitioner's dealings with the property. The court did not delve into other contentions raised, leaving parties free to address them separately.