Court sets aside provisional bank account attachment under Entry Tax Act, ruling against pre-assessment attachment.

The court set aside the order for provisional attachment of the petitioner's bank account under the Gujarat Value Added Tax Act, finding that the Entry Tax Act does not authorize provisional attachment for unpaid entry tax dues before assessment completion. As the disputed tax liability mainly comprised entry tax, and the petitioner had already paid a significant amount towards the tax demand, including entry tax, the court ruled against the provisional attachment to safeguard revenue interests.

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Issues:
Challenging provisional attachment of bank account under VAT Act for possible tax liability including entry tax; Authority's power of provisional attachment under Entry Tax Act; Disputed tax liability mainly comprising entry tax; Competence to provisionally attach bank account for unpaid entry tax dues before assessment completion.

Analysis:
The petitioner contested the provisional attachment of their bank account by the Assistant Commissioner of Commercial Tax under the Gujarat Value Added Tax Act, 2005, for a potential tax, interest, and penalty demand of Rs. 20 lakhs, which included entry tax liability. The petitioner argued that the Entry Tax Act does not grant the authority the power of provisional attachment. They had already paid Rs. 11 lakhs under protest towards basic duty liability. The petitioner's counsel emphasized that canceling the petitioner's dealer registration retrospectively would have minimal impact on tax liability due to the absence of input tax credit for imported goods.

The Assistant Government Pleader opposed the petition, claiming the petitioner lacked a permanent establishment in the state, and if registration were canceled retrospectively, the liability could reach Rs. 40 lakhs. However, the AGP failed to identify any provision in the Entry Tax Act allowing provisional attachment for unpaid entry tax dues before completing assessment. The court noted that the disputed tax liability, primarily entry tax, was not finalized, and the amount quoted in the order mainly consisted of the disputed entry tax.

The court highlighted that the Entry Tax Act did not provide for provisional attachment, unlike the VAT Act, which allows provisional attachment to safeguard revenue interests during assessment or reassessment proceedings. Given that the petitioner had already paid a significant amount towards the estimated tax, penalty, and interest liability, which included a substantial portion of the disputed entry tax, the court did not permit the provisional attachment of the bank account. Consequently, the court set aside the order dated 05.08.2016, allowing the petition to that extent and disposing of the matter.

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