High Court sets aside bank account attachment for tax demand, deems goods attachment sufficient to protect revenue interest.

The High Court set aside the orders attaching the petitioner's bank accounts to secure a tax demand of &8377; 2.81 crores by the Assistant Commissioner of Commercial Tax. The court deemed it premature to attach bank accounts when goods worth &8377; 1.31 crores were already under attachment, finding that the goods' attachment adequately protected the revenue's interest. The assessment for the petitioner was pending, and the court noted that the claim of correct taxation on interstate sales would be evaluated later.

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Issues:
Challenge to provisional attachment of bank accounts by Assistant Commissioner of Commercial Tax.

Analysis:
The petitioner, a timber company with VAT and Sales Tax registrations, challenged the provisional attachment of bank accounts by the Assistant Commissioner of Commercial Tax to secure a possible tax demand of &8377; 2.81 crores. The department alleged that the petitioner claimed reduced tax on interstate sales with cancelled dealers, resulting in a potential tax demand of &8377; 1.01 crores and penalty. The petitioner contended that no bogus billing occurred, providing documents to support actual goods transportation and reduced duty claims based on C forms. The authorities had also attached goods worth &8377; 1.31 crores. The Assistant Government Pleader argued that there was prima facie evidence of tax evasion through bogus billing.

The High Court noted that the assessment for the petitioner was pending, and the claim of correct taxation on interstate sales would be assessed later. However, the court found it premature for the authorities to attach bank accounts for a potential recovery of &8377; 2.81 crores, including tax, interest, and penalty, especially when goods worth &8377; 1.31 crores were already under attachment. The court held that the goods' attachment adequately protected the revenue's interest. Consequently, the orders attaching the petitioner's bank accounts were set aside, and the petition was disposed of accordingly.

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