Provisional bank account attachment may continue during tax assessment where revenue protection is justified and proceedings are time-bound

Provisional attachment of bank accounts under value added tax law may be sustained during pending assessment where the authority acts on relevant material to protect revenue, and immediate interference is not warranted. On the refund and appellate-order issues, the respondents undertook to communicate the signed appellate order and process the refund claims, so the relief became unnecessary; the refund applications were directed to be decided within four weeks. The assessment-linked proceedings were also ordered to be completed expeditiously within five weeks, with the petitioner required to cooperate and liberty preserved to seek further relief if the time limit was not met.

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Issues: (i) Whether the first appellate order and the refund applications required immediate communication and disposal. (ii) Whether the provisional attachment of the petitioner's bank accounts under the value added tax law was liable to be interfered with. (iii) Whether the assessment and allied proceedings should be concluded within a fixed time frame.

Issue (i): Whether the first appellate order and the refund applications required immediate communication and disposal.

Analysis: The grievance regarding the pending appeal ceased to survive once the respondents stated that the signed appellate order would be communicated to the petitioner. The refund applications also could not remain unattended, and the respondents undertook to process and decide them within a stipulated period. The court accepted these assurances and moulded the relief accordingly.

Conclusion: The prayer for a direction to decide the appeal became infructuous, and the refund applications were directed to be decided within four weeks.

Issue (ii): Whether the provisional attachment of the petitioner's bank accounts under the value added tax law was liable to be interfered with.

Analysis: Provisional attachment is an extraordinary and drastic measure, but it is permissible during pending assessment proceedings if the competent authority forms the requisite opinion that attachment is necessary to protect the revenue. In view of the material placed by the revenue, the short duration of the petitioner's business in the State, and the absence of immovable property in the State, the court declined to enter into a merits-based examination at that stage and found no ground to lift the attachment immediately.

Conclusion: The provisional attachment was not interfered with.

Issue (iii): Whether the assessment and allied proceedings should be concluded within a fixed time frame.

Analysis: Since the disputed attachment was to continue only pending assessment, and to avoid undue prejudice to either side, the court considered it appropriate to direct expeditious completion of the provisional assessment proceedings. The petitioner's cooperation was also required so that the proceedings could be concluded within the stipulated period.

Conclusion: The provisional assessment proceedings were directed to be concluded within five weeks, with liberty to seek further relief if the time limit was not met despite cooperation.

Final Conclusion: The petition was disposed of with directions for communication of the appellate order, prompt disposal of the refund claims, and expeditious completion of assessment proceedings, while allowing the provisional attachment to continue for the time being.

Ratio Decidendi: Provisional attachment under the value added tax law is a drastic measure that may be sustained during pending assessment proceedings when exercised on relevant material and for protecting the revenue, and the court may decline immediate interference while directing time-bound completion of the assessment.

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