2019 (10) TMI 406 - HC - VAT and Sales Tax

High Court quashes bank account attachment under Gujarat VAT Act during appeal

The High Court quashed the notice issued under section 44 of the Gujarat Value Added Tax Act, 2003 for attaching the petitioner's bank account during the ... Attachment of bank account under tax recovery powers - Stay application pending before appellate authority - Pre-deposit directed by appellate authority - Quashing of recovery action as undue exercise of powerAttachment of bank account under tax recovery powers - Stay application pending before appellate authority - Quashing of recovery action as undue exercise of power - Validity of order attaching petitioner's bank account under section 44 of the GVAT Act while petitioner's stay application in appeal was pending before the first appellate authority. - HELD THAT: - The court found on the record that the petitioner had preferred an appeal and a stay application was pending before the first appellate authority. Despite that pendency, the second respondent invoked powers under section 44 of the GVAT Act and attached the petitioner's bank account. Having regard to the existence of a pending stay application in the appeal against the assessment order, the court concluded that the respondent ought not to have proceeded with the drastic step of attaching the bank account. The attachment was therefore held to be unsustainable in the circumstances. In balancing the interests of the Revenue, the court preserved the appellate authority's direction for pre-deposit by requiring the petitioner to maintain in the account the amount directed to be pre-deposited by the first appellate authority.Impugned order dated 16.8.2019 attaching the petitioner's bank account under section 44 of the GVAT Act quashed and set aside; petitioner directed to maintain the pre-deposit amount of Rs. 8,52,841/- in the bank account.Final Conclusion: The petition under Article 226 is allowed: the attachment order dated 16.8.2019 is quashed for being an undue exercise of recovery powers while a stay application was pending, subject to the petitioner maintaining the pre-deposit amount ordered by the first appellate authority. Issues:Challenge to notice issued under section 44 of the Gujarat Value Added Tax Act, 2003 for attaching bank account during pendency of appeal before first appellate authority.Analysis:The petitioner challenged a notice dated 16.8.2019 issued by the Assistant Commissioner of Commercial Tax under section 44 of the GVAT Act, attaching the petitioner's bank account. The assessment order led to a tax demand of Rs. 24,57,753 along with interest under section 42(5) of the GVAT Act. The petitioner appealed, and while the stay application was pending, the bank account was attached. The first appeal was dismissed as the petitioner did not pre-deposit a specific amount. Subsequently, the petitioner appealed to the Gujarat Value Added Tax Tribunal against this order.The High Court noted that the petitioner had appealed before the first appellate authority, and during this appeal's pendency, the respondent attached the bank account under section 44 of the GVAT Act. Despite the stay application being pending, the attachment was made. The Court held that considering the stay application's pendency, the respondent should not have attached the bank account. Therefore, the court quashed the impugned order dated 16.8.2019 under section 44 of the GVAT Act. However, to secure the Revenue's interest, the petitioner was directed to maintain Rs. 8,52,841 in the bank account, as directed by the first appellate authority for pre-deposit.In conclusion, the petition succeeded, and the impugned order was quashed and set aside. The petitioner was required to maintain a specific amount in the bank account for the Revenue's interest. The rule was made absolute accordingly, and direct service was permitted.