Provisional attachment and bank recovery under tax law lapse or fail once the statutory period ends and liability is unassessed.

Section 45 of the Gujarat VAT Act permits provisional attachment only while assessment or reassessment proceedings are pending and only for the statutory period of one year; once that period expires, the attachment ceases to operate. The text also notes that direct recovery from a bank account, without an assessment order and without the dealer's consent, is not sustainable because liability has not yet crystallised. Any recovered amount was required to be refunded at that stage, while the revenue's right to recover any future assessed liability in accordance with law remained preserved.

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Issues: (i) whether the provisional attachment of the dealer's bank account could continue beyond the statutory period of one year under Section 45 of the Gujarat Value Added Tax Act, 2003; (ii) whether the amount recovered directly from the bank account could be retained in the absence of an assessment order.

Issue (i): whether the provisional attachment of the dealer's bank account could continue beyond the statutory period of one year under Section 45 of the Gujarat Value Added Tax Act, 2003.

Analysis: Section 45 empowers provisional attachment during pending assessment or reassessment proceedings to protect government revenue. The provision expressly limits the life of such attachment by providing that it ceases after one year from the date of the order. Since that period had already expired, the attachment could no longer survive.

Conclusion: The provisional attachment was held to be no longer effective and the petitioner succeeded on this issue.

Issue (ii): whether the amount recovered directly from the bank account could be retained in the absence of an assessment order.

Analysis: The recovery was made directly from the bank account without an assessment order and without the petitioner's consent. In the absence of crystallized liability through assessment, such unilateral recovery was impermissible. The amount was therefore directed to be refunded, while preserving the respondent's right to recover any future assessed liability in accordance with law.

Conclusion: The recovery was held to be unsustainable at that stage and refund was ordered in favour of the petitioner.

Final Conclusion: The petition succeeded insofar as the attachment had lapsed by operation of law and the recovered amount had to be returned, without affecting the parties' rights in the pending assessment proceedings.

Ratio Decidendi: A provisional attachment under a taxing statute cannot continue beyond the period expressly fixed by the statute, and recovery from a bank account cannot be sustained before assessment crystallizes the liability.

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