Coercive bank account attachment during pending tax stay applications is unwarranted absent exceptional circumstances and fair exercise of power.

Coercive attachment of bank accounts under section 44 of the Gujarat VAT Act was held unwarranted where the assessee had filed timely appeals with stay applications against reassessment demands. The court treated the recovery power as a drastic measure requiring fair, reasonable, and circumspect use, and found that immediate attachment before disposal of the stay applications was unjustified in the absence of exceptional circumstances such as deliberate delay or other conduct indicating evasion. It also noted non-application of mind because the full demand was sought to be recovered through each attached account. The attachment orders were therefore quashed and set aside.

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Issues: Whether the attachment of the assessee's bank accounts under section 44 of the Gujarat Value Added Tax Act, 2003 was justified when appeals and stay applications against the reassessment demands were pending consideration.

Analysis: The assessee had preferred appeals within limitation together with stay applications against the reassessment demands. The recovery authority, instead of awaiting the decision on the stay applications, attached the bank accounts and repeated the attachment even after issuing a short notice calling for payment within three days. The power under section 44 is a drastic recovery measure and was required to be exercised reasonably, fairly, and with circumspection. In the absence of exceptional circumstances such as deliberate delay by the assessee or any indication that the assessee was a fly-by-night operator, coercive recovery before disposal of the stay applications was unwarranted. The orders also disclosed non-application of mind because the entire demand was sought to be recovered through each attached account.

Conclusion: The attachment orders under section 44 were not sustainable and were quashed and set aside.

Ratio Decidendi: Where a statutory appeal and stay application are pending, coercive recovery by attachment of bank accounts should ordinarily be deferred unless exceptional circumstances justify immediate action, and the recovery power must be exercised fairly, reasonably, and without non-application of mind.

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