2020 (3) TMI 77 - HC - VAT and Sales Tax

Withdrawal of Refund with due interest from the fixed deposit in the bank account of the petitioner - Bihar Value Added Tax Act, 2005 - HELD THAT - In the instant case, the amount of ₹ 6,15,804/- has been realized from the account of the bank by the respondent-Commercial Taxes Department in exercise of powers conferred under Section 47 of the Act. The said power has been invoked in view of the fact that the petitioner has failed to respond to the notice issued under Section 28(1) of the Act - The withdrawal of the amount in question from the bank was made prior to the order by the appellate authority whereby the matter was remanded back for passing order afresh. The issue of refund of the amount to the tune of ₹ 6,15,804/- withdrawn from the fixed deposit in the bank account of the petitioner with due interest would arise only if it is found that the amount is in excess of the amount due from the petitioner. The action of the respondent authorities of the Commercial Taxes Department in invoking the jurisdiction under Section 47 of the Act can not be held to be bad - petition disposed of with a direction to the taxing authority i.e. the Commercial Taxes Officer, Jamui Circle, Jamui (respondent no.7) to pass order afresh as directed by the appellate authority within a period of two months from the date of receipt/production of a copy of the order in accordance with law after hearing the parties.

Issues:
1. Authority to withdraw money from petitioner's bank account without notice under Bihar Value Added Tax Act, 2005.
2. Compliance with statutory obligations by the respondent-bank.
3. Assessment of tax liability under Section 28 of the Act.
4. Special mode of recovery of tax under Section 47 of the Act.
5. Refund of excess amount withdrawn from petitioner's account.

Analysis:
1. The petitioner sought a refund of ?6,15,804 withdrawn from their fixed deposit without proper notice under the Bihar Value Added Tax Act, 2005. The petitioner argued that the respondents lacked authority to withdraw the money without serving a notice under Section 47 of the Act, which was essential for initiating a special mode of recovery.

2. The respondent-bank contended that it acted as per statutory obligation upon receiving instructions from the Commercial Taxes Department. The bank, after encashing the fixed deposit and adjusting the loan account, remitted the balance to the Commercial Taxes Department, stating it was under a statutory obligation as per Section 47 of the Act.

3. The respondent Commercial Taxes Department highlighted the petitioner's tax liability for purchasing liquor without registration under the Act. Despite multiple notices and orders passed against the petitioner, including an ex parte order for ?11,39,161, the petitioner failed to respond or provide necessary documentation.

4. The judgment referred to Sections 28 and 47 of the Act. Section 28 deals with assessing tax for dealers evading registration, while Section 47 outlines the special mode of recovery of tax and other liabilities. The Court observed that the amount withdrawn by the Commercial Taxes Department was in line with Section 47 due to the petitioner's non-compliance with notices under Section 28.

5. The Court directed the Commercial Taxes Officer to pass a fresh order within two months as per the appellate authority's directive. If any excess amount was found to be withdrawn, it should be refunded to the petitioner promptly. However, if the petitioner failed to cooperate or provide necessary documents, the officer was authorized to pass an ex parte order.

This detailed analysis of the judgment from the Patna High Court addresses the issues raised by the petitioner regarding the withdrawal of funds, statutory obligations of the bank and tax department, assessment of tax liability, special mode of recovery, and the potential refund of excess amounts withdrawn.

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