Court quashes bank account attachment order under VAT Act, citing procedural flaws. Petitioner granted fair hearing opportunity.

The court quashed the impugned order attaching the petitioner's bank account under Section 45 of the VAT Act due to procedural flaws, including lack of opportunity for the petitioner to be heard and the order being non-reasoned. The court directed the order to be treated as provisional pending a final decision after affording the petitioner a fair hearing. The petitioner was instructed to present their case to the authority by a specified date, emphasizing the need for a reasoned decision in accordance with the law. No costs were awarded, and the final decision on the attachment order was left to the appropriate authority.

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Issues:
Challenge to impugned order attaching bank account under Section 45 of the VAT Act based on breach of natural justice and non-reasoned order.

Analysis:
The petitioner challenged the impugned order dated 9th January 2017, attaching their bank account under Section 45 of the Gujarat Value Added Tax Act, 2003, citing a breach of natural justice. The petitioner argued that the order was issued without waiting for their reply to the show cause notice, and it lacked a reasoned basis for invoking powers under Section 45. The petitioner contended that the authority must record satisfaction that the dealer might dispose of properties or withdraw funds to avoid tax liability before passing such an order. The petitioner relied on a previous court decision to support their case.

The respondent defended the impugned order, highlighting the petitioner's conduct of withdrawing a substantial amount from the bank account after a search on 4th January 2017. The respondent argued that the withdrawals, especially over Rs. 60 lakhs, indicated an intention to evade tax liability, necessitating immediate action to prevent further revenue loss. The respondent justified the order as a measure to protect the revenue's interest and prevent the dealer from avoiding tax obligations.

Upon hearing arguments from both parties, the court noted that the impugned order was issued on the same day as the show cause notice, raising concerns about the lack of opportunity for the petitioner to be heard. The court also observed that the order was non-speaking and non-reasoned, failing to justify the attachment of the bank account under Section 45. Consequently, the court quashed and set aside the impugned order but directed that it be treated as a provisional attachment pending a final order after affording the petitioner a reasonable opportunity to be heard.

The court instructed the petitioner to appear before the appropriate authority to make submissions regarding the proposed order of attachment by a specified date. The authority was directed to pass a reasoned order in accordance with the law and on merits, ensuring a fair process for both parties. The court emphasized that its ruling did not favor either party on the merits of the attachment order, leaving the final decision to the appropriate authority. No costs were awarded in the case, considering the circumstances.

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