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TMI Blog2022 (4) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... as bank account; and" (b) Pending hearing and final disposal of this petition, this Honorable Court by way of ad-interim and/or interim relief be pleased to restrain the respondents to recover any amount from bank account number 00000010503343023 of SBI Bank; bank account of number 051754687001 and 071006084004 of HSBC and from any other bank account of the petitioner No.1 with respect to the notices dated 31.07.2021 and 02.08.2021 (Annexure - H colly) or any other similar notices, if any issued to any banks where the petitioner No.1 has its bank account; and (b.1) Pending hearing and final disposal of this petition, this Honorable Court by way of ad-interim and/or interim relief be pleased to restrain the respondents to recover any amount from any bank account of the petitioner No.1 in HSBC Bank with respect to the letter dated 05.08.2021 (Annexure - IA); and (c) Pending hearing and final disposal of this petition, this Honorable Court by way of ad-interim and/or interim relief be pleased direct the respondents to release the bank account number 00000010503343023 of SBI Bank; bank account of number 051754687001 and 071006084004 of HSBC attached vide notices 31.07.2021 and 02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 49,80,05,122/-+ Interest to the same dealer. You possess the Rs. 49,80,05,122/-+ Interest on behalf of the said dealer. So, I State Tax Officer (2) Of Unit-8, Ahmedabad, as the power Vested to me U/s. 44.of Gujarat Value Added Tax Act-2003, order to Deposit Rs. 49,80,05,122/-+ Interest with Prescribed Challan at Government Treasury (or by e payment mode) within Seven days on receipt of this Notice and also provide the details of closing balance to the State Tax Inspector who has come to your bank then issue Demand Draft in favour of "SBI VAT A/C" as per available closing balance of aforementioned dealer (Refer Section 44 and 67(9)(1) of Gujarat Value Added Tax Act-2003), Also do provide the details of "PAN INDIA SEARCH" (Refer Section 70 of Gujarat Value Added Tax Act-2003). If Failing to comply with orders of this notice you are liable to penalty of Rs. 25,000/-(INR) (Refer Section 70 of Gujarat Value Added Tax Act- 2003). Place : Ahmedabad Date : 31/07/2021 Sd/- State Tax Officer (2) Unit-8, Ahmedabad." 7 Identical two even dated notices as above came to be issued to the Branch Manager, HSBC Bank Limited, C. G. Road, Ahmedabad with respect to the account No.1010533 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overed. 1,51,24,422 Therefore, outstanding after adjustment of recovered amt., pre-deposit & bank guarantee. 6,86,50,997 8 We have heard Mr. Tushar Hemani, the learned Senior Counsel assisted by Mr. Kuntal A. Parikh, the learned advocate appearing for the writ applicants and Mr. Utkarsh Sharma, the learned A.G.P. appearing for the State respondents. 9 Mr. Hemani made the following submissions: "(i) Indisputably, the respondent No.3 has not invoked the power under Section 45 of the VAT Act to attach the bank accounts of the writ applicant No.1 during the pendency of any proceedings of assessment or reassessment of turnover escaping assessment. (ii) The respondent No.3 has failed to frame an opinion for the purpose of protecting the interest of the government revenue by attaching the bank accounts of the writ applicant no.1. (iii) Further, the respondent No.3 has not brought on record any tangible material on the basis of which he would have framed an opinion that the writ applicant No.1 is likely to defeat the demand and therefore attachment is necessary for protecting the interest of government revenue. (iv) The respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , at a stage which is anterior to the finalization of an assessment or the raising of a demand. Conscious as the legislature was of the draconian nature of the power and the serious consequences which emanate from the attachment of any property including a bank account of the taxable person, it conditioned the exercise of the power by employing specific statutory language which conditions the exercise of the power. The language of the statute indicates first, the necessity of the formation of opinion by the Commissioner; second, the formation of opinion before ordering a provisional attachment; third the existence of opinion that it is necessary so to do for the purpose of protecting the interest of the government revenue; fourth, the issuance of an order in writing for the attachment of any property of the taxable person; and fifth, the observance by the Commissioner of the provisions contained in the rules in regard to the manner of attachment. Each of these components of the statute are integral to a valid exercise of power. In other words, when the exercise of the power is challenged, the validity of its exercise will depend on a strict and punctilious observance of the statuto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the maintenance of a proportion between the nature and extent of the attachment and the purpose which is sought to be served by ordering it. Moreover, the words embodied in sub-Section (1) of Section 83, as interpreted above, would leave no manner of doubt that while ordering a provisional attachment the Commissioner must in the formation of the opinion act on the basis of tangible material on the basis of which the formation of opinion is based in regard to the existence of the statutory requirement. While dealing with a similar provision contained in Section 4536 of the Gujarat Value Added Tax Act 2003 , one of us (Hon'ble Mr Justice MR Shah) speaking for a Division Bench of the Gujarat High Court in Vishwanath Realtor v State of Gujarat observed: "8.3. Section 45 of the VAT Act confers powers upon the Commissioner to pass the order of provisional attachment of any property belonging to the dealer during the pendency of any proceedings of assessment or reassessment of turnover escaping assessment. However, the order of provisional attachment can be passed by the Commissioner when the Commissioner is of the opinion that for the purpose of protecting the interest of the Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority. Application made on 10.01.2020 under "Vera Samadhan Yojna" benefit availed. 15.12.2013 30.06.2013 31.08.2013 15.11.2013 3 2011-12 31.03.2016 8,53,10.401/- 03.05.2016 Not approached Stay granted before 1st appellate authority till 30.09.2019 30.06.2017 30.09.2019 4 2012-13 27.03.2017 1,85,80,473/- VAT Total dues 1,43,47,973/- Remaining dues 11,497,892/- CST 26.05.2017 16.07.2021 Stay till 31.10.2021 under VAT dues Appeal partly allowed by 1st appellate authority qua CST dues on 05.09.2019. Appeal before Tribunal pending 19.04.2019 04.07.2019 17.07.2019 27.08.2019 5 2013-14 19.02.2018 9,96,37,459/- VAT 16.03.2018 28.07.2021 Appeal rejected on 23.12.2020 before 1st appellate authority Appeal pending, No stay granted before Tribunal. 27.06.2018 13.08.2018 14.08.2018 16.08.2018 05.10.2018 04.02.2019 28.09.2020 6 2014-15 18.03.2019 Total dues 8,75,57,140/- VAT Remaining VAT dues to be recovered 2,34,76,095/- 03.06.2019 28.07.2021 Partly allowed by 1st appellate authority appeal pending, no stay granted before Tribunal. 12.07.2019 30.12.2019 30.06.2019 Details of notices issued for payment of tax liabilities" Sr. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner may, at any time or from time to time, by notice in writing, a copy of which shall be forwarded to the dealer at his last known address, require. (b) any person who holds or may subsequently hold monies for or on account of such dealer, to pay to the Commissioner, either forthwith upon the monies becoming due or being held or within the time specified in the notice (but not before the monies becomes due or is held as aforesaid) so much of the monies as is sufficient to pay the amount due by the dealer in respect of the arrears of tax, penalty or interest under this Act, or the whole of the money when it is equal to or less than that amount. Explanation. - For the purposes of this sub-section, the amount of monies due to a dealer from, or monies held for or on account of a dealer by any person, shall be calculated by the Commissioner after deducting therefore such claims, if any, lawfully subsisting, as may have fallen due for payment by such dealer to such person." 9 I say and submit that the respondents authorities have recovered a total amount of Rs. 17,48,29,535/- towards the tax liability of the petitioner for the above mentioned assessment years after giving opp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said banks to 'attach the balance of current/saving accounts and fixed deposit. 7.4 Furthermore, the respondent no.3 himself contradicts his above assertion, by stating in the reply, the fact that the bank accounts of petitioner no.1 are defreezed by his order dated 06.08.21. It is therefore, submitted, that if, respondent no.3 had not ordered for attachment of the bank accounts in the impugned notices, then the accounts would not have been de-freezed vide letter dated 06.08.2021 (attached in Annexure R-1' in the said Reply). 7.5 However, it is submitted that section 44 of the GVAT Act pertains to only recovery from bank accounts and does not empower the authorities to attach the bank accounts of petitioner no.1. The bank accounts had been ordered to be attached by respondent no.3 and thereafter, they were attached by the HSBC and SBI banks. In other words, on specific direction for attachment by Respondent no.3, the said Banks did not allow petitioner no.1 to operate its Bank accounts. Therefore, not expressly mentioning reference to section 45 the GVAT Act cannot be treated as non-invocation of the provisions of Section 45 of the GVAT Act. The conduct of responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xure M Colly.). Later the Petitioner no.1 removed 'Aslali' address from its Registration Certificate because it had no business whatsoever from 'Aslali'. This fact transpires from Registration Certificates dated 21.05.2016 issued under the GVAT Act and CST Act which are already attached as Annexure A and Annexure B with the memo of the petition. Thus, it is clear that the address of 'Aslali' has been replaced by address of '1" Floor, Chakravarti Complex, Navrangpura, Ahmedabad' (for short "Chakravarti") in Registration Certificate of the Petitioner no.1 since 2016 and Aslali address is not all part of the Registration Certificate of the Petitioner. (ii) In view of above facts, all subsequent communications were made by the respondents to petitioner no.1 to either the 'Chakravarti' address or to '8th Floor, No.807-808, Venus Atlantis, Opp. Safal Pegasus, Prahaladnagar, Satellite, Ahmedabad. (for short, 'Venus Atlantis') address as mentioned in the table below: Sr. No. Date Document Address Annexure 1 01.12.2015 A letter addressed to petitioner no.1 by the respondents. Venus Atlantis N 2 18.03.2016 Notice in Form 309 Chakravarti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract to the contrary, the Commissioner may at any time or from time to time , by notice in writing, a copy of which shall be forwarded to the dealer at his last known address, require, - (a) any person from whom any amount of monies is due, or may become due, to a dealer on whom notice has been served under sub-section (1), or (b) any person who holds or may subsequently hold monies for or on account of such dealer, to pay the Commissioner, either forthwith upon the monies becoming due or being held or within the time specified in the notice (but not before the monies becomes due or is held as aforesaid) so much of the monies as is sufficient to pay the amount due by the dealer in respect of the arrears of tax, penalty or interest under this Act, or the whole of the money when it is equal to or less than that amount. Explanation.- For the purposes of this subsection, the amount of monies due to a dealer from, or monies held for or on account of a dealer by any person, shall be calculated by the Commissioner after deducting there from such claims, if any, lawfully subsisting, as may have fallen due for payment by such dealer to such person. (2) The Commissioner may amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t due by the assessee in respect of arrears or the whole of the money when it is equal to or less than that amount. (ii) A notice under this sub- section may be issued to any person who holds or may subsequently hold any money for or on account of the assessee jointly with any other person and for the purposes of this sub- section, the shares of the joint holders in such account shall be presumed, until the contrary is proved, to be equal. (iii) A copy of the notice shall be forwarded to the assessee at his last address known to the Assessing Officer or Tax Recovery Officer], and in the case of a joint account to all the joint holders at their last addresses known to the Assessing Officer or Tax Recovery Officer. (iv) Save as otherwise provided in this sub- section, every person to whom a notice is issued under this subsection, shall be bound to comply with such notice, and, in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary for any pass book, deposit receipt, policy or any other document to be produced for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 222." 14. The above referred Section 226(3) of the Act, 1961 is modelled upon the provision of the Australian Act, Section 218. It is need less to reproduce the corresponding provision in the Australian Act. At page 1099 of "Income-tax Law and Practice (Commonwealth)" by Challener and Greenwood, second edition, it is observed as follows in discussing the scope of the Australian enact merit: "The purpose of Section 218 is to enable the Commissioner to collect unpaid taxes from persons owing money to the tax-payer without having to proceed to judgment and issue execution. Thus, sub-section (1) authorises the Commissioner to give notice to any person mentioned in (a), (b), (c) on (d) of the subsection to pay to the Commissioner either forthwith or at or within a time specified in the notice, not being a time before the money becomes due or is held, such amount as is sufficient to pay the tax due and any financial costs. or the whole of the money if it is not greater than (he amount due. A copy of the notice is to be forwarded to the tax-payer. Any person making payment pursuant to such a notice is deemed to have been acting under the authority of the taxpayer and is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the dealer under sub-section (1) thereof, has not been satisfied. 19. Another aspect of the matter is that a condition precedent for issuing notice under section 44 of the GVAT Act to the second respondent bank is that the said bank should be holding or may subsequently hold monies on account of such dealer. The expression "dealer" has been defined under section 2(10) of the GVAT Act to mean any person who, for the purpose of or consequential to his engagement in or, in connection with or incidental to or in the course of business buys, sells, manufactures, makes supplies or distributes goods directly or otherwise, whether for cash or deferred payment, or for commission, remuneration or otherwise and includes the categories of persons enumerated thereunder. In the present case, it is not the case of the first respondent that the bank was holding any monies on account of the dealer, viz. the third respondent herein. Therefore, the impugned order dated 26.9.2018 directing the second respondent bank to deposit a sum of Rs. 17,67,45,934/- along with interest at the rate of 18% per annum, does not meet with the requirements of section 44 of the GVAT Act."" 17 Thus, in the absence ..... X X X X Extracts X X X X X X X X Extracts X X X X
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