Court partially grants mandamus petition, quashes cheque collection without assessment order, directs return. Adjudication to proceed.

The court partially allowed the petition for a writ of mandamus, quashing the collection of cheques without a final assessment order and directing their return. Adjudication proceedings were to continue, with the respondents permitted to pass a provisional assessment order if necessary. The amount deposited was to be returned, and the rule was made absolute without costs.

---

---

Issues involved:
Petition for writ of mandamus, recovery proceedings under Vat Act, return of cheques, prohibition on coercive measures, declaration of tax liability without assessment order.

Analysis:
The petitioner filed a petition under Article 226 seeking various reliefs, including quashing recovery proceedings without due process of law, return of specific cheques, prohibition on coercive measures by Commercial Tax Department, and declaration of no tax liability without passing orders under the Vat Act. The petitioner argued that the respondents had collected cheques totaling a significant amount without passing any assessment order or crystallizing the tax demand. Citing a previous Division Bench order, the petitioner requested the court to quash the action and direct the return of the cheques.

The learned AGP representing the respondents contended that adjudication proceedings were initiated, show-cause notices issued, and based on preliminary findings, the petitioners were likely liable for a substantial amount. However, no final or provisional assessment order had been passed, and the assessment proceedings were at a show-cause stage. The court noted that the respondents had recovered the cheques towards future tax demand without completing the assessment proceedings or passing any final or provisional assessment order. Referring to the previous Division Bench decision, the court held that collecting cheques without a final assessment order was impermissible.

Consequently, the court partially allowed the petition, quashing the collection of cheques without a final assessment order and directing their return to the petitioners. The adjudication proceedings were to continue in accordance with the law, and the respondents were permitted to pass a provisional assessment order if allowed. The amount deposited by the petitioners was to be returned, and the rule was made absolute with no costs incurred.

---