2022 (5) TMI 470 - HC - VAT and Sales Tax

Attachment of bank accounts - delayed action in making assessment - It is the Petitioner's grievance that though within the stipulated period of thirty days, he has applied for setting aside the ex-parte orders, however, due to lethargy and negligence on the part of the Respondents, applications remained unattended - repeal of Bombay Sales Tax Act - HELD THAT - Since two layers of appeal have been provided to challenge the assessment, the said exercise cannot be undertaken under writ Jurisdiction. It is well settled that the writ Court should be slow in interfering into the matters, where alternative remedy of appeal has been provided. Therefore, we deem it appropriate to keep all these points open to be agitated and decided before the appropriate forum. Reverting back, it emerges that the Petitioner has timely applied for setting aside ex-parte assessment orders. There is no justification for the Respondents total inaction of sleeping over the application for long ten years. In other words, ex-parte assessment order needs to be set aside so as to give the Petitioner an opportunity to justify their returns. In view of the matter, it shall be in the tune of situation to set aside ex-parte assessment orders with direction to the Petitioner to appear before the authority, who in turn shall give them hearing and make the assessment in accordance with law. Since the ex-parte assessment orders is set aside, the bank attachment would also remain no longer in force. The ex-parte assessment orders dated 25th March, 2010 are set aside. The consequential bank attachment orders also stands quashed - Petition disposed off.

Issues Involved:
1. Legality of ex-parte assessment orders and consequential bank account attachment.
2. Delay in adjudicating applications for setting aside ex-parte assessment orders.
3. Impact of the repeal of the Bombay Sales Tax Act and the introduction of the GST Act.
4. Availability of alternative remedies for challenging the assessment orders.

Issue-wise Detailed Analysis:

1. Legality of Ex-parte Assessment Orders and Consequential Bank Account Attachment:

The petitioner challenged the assessment orders and the consequential attachment of bank accounts for the financial years 2002-2003, 2003-2004, and 2004-2005 under the Bombay Sales Tax Act, 1959, and the Central Sales Tax Act, 1956. The petitioner, a private limited company engaged in the supply of engineering goods, filed annual returns for the said years on 10th February 2006. The Assessing Officer passed six ex-parte assessment orders on 25th March 2010. The petitioner applied for cancellation of these ex-parte orders under Section 33D of the Bombay Sales Tax Act on 13th April 2010. However, these applications were not adjudicated for ten years, and the State Tax Officer attached the petitioner’s bank accounts on 18th January 2019. The petitioner contended that the attachment was illegal and unreasonable, especially given the prolonged delay.

2. Delay in Adjudicating Applications for Setting Aside Ex-parte Assessment Orders:

The petitioner argued that despite applying within the stipulated period, the respondents failed to adjudicate the applications for setting aside the ex-parte orders. The petitioner repeatedly requested the withdrawal of the attachment and adjudication of the applications, but the respondents neither decided nor communicated any decision. The respondents justified their inaction by citing the merger of internal divisions and the misplacement of records. However, the court found that the sole blame lay with the respondents for not deciding the applications within a reasonable time. The court noted that it was incumbent on the authorities to decide the petitioner’s application in one way or another.

3. Impact of the Repeal of the Bombay Sales Tax Act and the Introduction of the GST Act:

The petitioner contended that the assessment orders made under the repealed Bombay Sales Tax Act were illegal and not saved by the provisions of the GST Act. The petitioner argued that it was unreasonable to make a fresh assessment after a lapse of sixteen years, as it would be difficult to produce the accounts for reassessment. The respondents, however, contended that the assessment was still 'open' and within the period of limitation. The court did not delve into this issue in detail, as it found that the matter should be addressed through the appropriate appellate forums.

4. Availability of Alternative Remedies for Challenging the Assessment Orders:

The court emphasized that the assessment orders could be challenged through a first appeal before the Deputy Commissioner of Sales Tax Appeal and a second appeal before the Joint Commissioner of Sales Tax Appeal or Maharashtra Sales Tax Tribunal. Given the availability of these alternative remedies, the court deemed it inappropriate to exercise its writ jurisdiction to interfere in the matter. The court noted that the petitioner had timely applied for setting aside the ex-parte assessment orders and that the respondents' inaction was unjustifiable. Consequently, the court set aside the ex-parte assessment orders and the consequential bank attachment orders, directing the petitioner to appear before the Assessing Officer for a fresh hearing and assessment.

Conclusion:

The court set aside the ex-parte assessment orders dated 25th March 2010 and the consequential bank attachment orders. The petitioner was directed to appear before the Assessing Officer upon receipt of a fresh notice, and the Assessing Officer was instructed to give the petitioner a hearing and make a fresh assessment in accordance with the law. The respondents were allowed to take follow-up steps for recovery, if any, after the fresh assessment. All writ petitions were disposed of accordingly.

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