Bank attachment for admitted tax arrears sustained where persistent default and lack of bona fides defeated writ relief

Where admitted sales tax arrears remained unpaid despite repeated notices, persistent default and dishonoured cheques, the Madras HC treated bank attachment under section 26 of the Tamil Nadu General Sales Tax Act, 1959 as a valid recovery measure. It held that the statutory power to proceed against the bank account was not illegal or arbitrary in those circumstances, and that writ relief would not be granted to a party lacking bona fides and clean hands. The attachment was sustained and the challenge to the recovery action failed.

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Issues: Whether the bank attachment issued for recovery of admitted sales tax arrears under section 26 of the Tamil Nadu General Sales Tax Act, 1959 was liable to be quashed and the bank account restored to the petitioner.

Analysis: The admitted tax liability for multiple assessment years was not in dispute, and repeated notices had been issued over a long period without substantial payment. The record showed a consistent pattern of default, issuance of dishonoured cheques, and absence of bona fides in the petitioner's conduct. In those circumstances, the statutory power to recover tax dues by proceeding against the bank account could not be characterised as illegal or arbitrary. A writ court would not extend equitable relief to a party that had failed to honour its admitted statutory obligation and had not approached the court with clean hands.

Conclusion: The attachment of the bank accounts for recovery of admitted tax arrears was upheld and the challenge was rejected.

Final Conclusion: The writ petition failed, and no interference was warranted with the recovery action taken by the Revenue.

Ratio Decidendi: Where tax liability is admitted and the assessee shows persistent default and lack of bona fides, the statutory power of recovery by bank attachment is sustainable and writ relief is unavailable.

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