Bank account attachment outside the State sustained for tax recovery; writ pendency alone did not bar proceedings.

Recovery provisions under the Karnataka Value Added Tax Act, 2003 and the Karnataka Tax on Entry of Goods Act, 1979 were applied to permit recovery from a bank account outside Karnataka where the account was accessible and held money on behalf of the assessee. The Court treated a bank account as attachable property and rejected the argument that territorial limits prevented recovery through electronic banking channels. It also held that the pendency of writ petitions and stay applications did not, by itself, bar recovery proceedings in the absence of an operative stay. The recovery action under both enactments was therefore sustained.

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Issues: (i) Whether recovery notices under the Karnataka Value Added Tax Act, 2003 and the Karnataka Tax on Entry of Goods Act, 1979 could be issued to the petitioner's bank branch situated outside the State of Karnataka; (ii) Whether recovery proceedings could be initiated while the writ petitions and stay applications were pending.

Issue (i): Whether recovery notices under the Karnataka Value Added Tax Act, 2003 and the Karnataka Tax on Entry of Goods Act, 1979 could be issued to the petitioner's bank branch situated outside the State of Karnataka.

Analysis: The recovery provisions empowered the prescribed or assessing authority to proceed against any person who holds or may hold money for or on behalf of the dealer. The petitioner was admittedly an assessee under both enactments and an assessment or reassessment order creating tax liability was in force. The Court also treated a bank account as property capable of attachment and accepted that modern electronic banking makes funds accessible across locations. On that basis, the territorial restriction urged by the petitioner was held not to bar recovery from an accessible bank account outside Karnataka.

Conclusion: The issue was decided against the petitioner and in favour of the Revenue.

Issue (ii): Whether recovery proceedings could be initiated while the writ petitions and stay applications were pending.

Analysis: The authority relied upon by the petitioner dealt with stay in a statutory appeal, whereas the present matter was a writ challenge to the vires of the Act and related recovery action. The Court held that the cited principle did not prevent initiation of recovery in the present factual and procedural setting.

Conclusion: The issue was decided against the petitioner and in favour of the Revenue.

Final Conclusion: The writ petitions were held to be without merit and the recovery action under the two enactments was sustained.

Ratio Decidendi: Where the statute authorises recovery from any person holding money on behalf of a dealer, such recovery may be pursued against an accessible bank account even if the branch is outside the State, and the pendency of a writ challenge does not by itself bar recovery in the absence of an operative stay.

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