Bank account attachment during a pending stay application under VAT law was quashed, with pre-deposit protection retained.

Bank account attachment under section 44 of the Gujarat Value Added Tax Act was held improper where the assessee's first appeal and stay application were still pending. The High Court found that, in those circumstances, the Revenue should not have attached the account during pendency of the stay request and quashed the attachment notice. To protect the Revenue's interest, the assessee was directed to maintain the pre-deposit amount specified by the first appellate authority in the bank account.

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Issues: Whether the attachment of the petitioner's bank account under section 44 of the Gujarat Value Added Tax Act, 2003 could be sustained while the stay application in the appeal against the assessment order was pending.

Analysis: The assessment had given rise to a tax and interest demand, and the petitioner had already preferred an appeal. The stay application in that appeal was pending before the first appellate authority when the revenue authorities resorted to attachment of the bank account under section 44. In these circumstances, the attachment was treated as a drastic recovery measure that ought not to have been invoked while the request for stay remained undecided. The existence of the pending appellate remedy and stay application was treated as a material circumstance against immediate coercive recovery.

Conclusion: The attachment order could not be sustained and was quashed and set aside.

Ratio Decidendi: Coercive recovery by attachment should not be resorted to during the pendency of a stay application in appeal where the challenge to the assessment is still under consideration.

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