2004 (6) TMI 594 - HC - VAT and Sales Tax

Court quashes attachment orders, releases stock, and provides relief from security demand under Act

Krunal Oil Marketing Limited Versus Commissioner of Sales Tax

Krunal Oil Marketing Limited Versus Commissioner of Sales Tax - [2005] 142 STC 366 (Guj) Issues:Petition under Article 226 seeking quashing of attachment orders and security demand under Gujarat Sales Tax Act, 1969.Analysis:The petitioner filed a petition under Article 226 seeking to quash orders dated August 26, 2003, and December 29, 2003, where the respondents attached goods and demanded security of approximately Rs. 15 lacs. The petitioner argued that the orders were without jurisdiction, citing a previous judgment and legal position established by the Supreme Court. The petitioner contended that the assessment had been completed under section 41(3) of the Act, and the cancellation of suppliers' registration certificates retrospectively should not affect genuine transactions.The respondents argued that the cancellation of registration certificates ab initio meant purchases from those dealers were to be treated as from unregistered dealers, making the petitioner liable for tax. They relied on the retrospective cancellation orders of the suppliers' registrations to support their actions of attachment and security demand. The respondents contended that the petitioner should pay tax on purchases from the cancelled dealers.Referring to the legal position established by the Supreme Court in State of Maharashtra v. Suresh Trading Company [1998] 109 STC 439 and the judgment in Giriraj Sales Corporation case, the Court held that genuine transactions should not be affected by retrospective cancellation of registration certificates. The Court found that the assessment had already been completed under section 41(3) of the Act, and therefore, the impugned orders were quashed and set aside. The Court directed the release of the attached stock and relieved the petitioner from maintaining a minimum stock of oil.In conclusion, the Court allowed the petition, making the rule absolute with no order as to costs. The judgment declared the impugned orders as bad in law and directed the respondents to release the stock of oil, providing relief to the petitioner from the attachment and security demand.This detailed analysis of the judgment highlights the legal arguments presented by both parties, the reliance on previous judgments and legal provisions, and the final decision of the Court quashing the impugned orders and providing relief to the petitioner.