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of <h1>VAT authorities' attachment of bank funds from wrong entity based on former employment connection ruled illegal and arbitrary</h1> <h3>M/s. Riddhi Jewels Versus Commercial Tax Officer</h3> M/s. Riddhi Jewels Versus Commercial Tax Officer - TMI Issues:Challenging the illegal attachment and withdrawal of funds, Corporate veil lifting, Violation of Article 300-A of the Constitution of India.Detailed Analysis:Challenging the illegal attachment and withdrawal of funds:The petitioner, a proprietary concern, contested the respondents' action of attaching and withdrawing Rs.4,39,210 from its bank account to recover VAT dues of another company. The petitioner argued that there was no notice to them or their proprietor regarding the tax arrears of the other company. They contended that the attachment was arbitrary, illegal, and violated their rights. Despite the petitioner's explanations and requests to withdraw the notice, the respondents persisted in their actions.Corporate veil lifting:The 1st respondent claimed that the petitioner's proprietor was a 'concerned person' for the other company and failed to disclose his resignation. They alleged a conspiracy to evade taxes between the petitioner and the other company. However, the court found that the petitioner had no ongoing connection with the other company after resigning in 2013. The court dismissed the notion of treating both entities as related and emphasized that the petitioner had registered a separate entity post-resignation.Violation of Article 300-A of the Constitution of India:The court noted that the tax dues being recovered were not of the petitioner but of the other company. The respondents' actions were deemed arbitrary and illegal, violating Article 300-A of the Constitution. The court ordered the 1st respondent to refund the withdrawn amount with interest and pay costs to the petitioner, emphasizing the lack of evidence linking the petitioner's proprietor to the tax dues of the other company.In conclusion, the court ruled in favor of the petitioner, highlighting the lack of justification for the attachment and withdrawal of funds. The judgment emphasized the importance of evidence and legal basis for such actions, ultimately protecting the petitioner's rights and ordering restitution and costs to be paid by the respondents.
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