2020 (12) TMI 1011 - HC - VAT and Sales Tax

Court orders HDFC Bank to unfreeze account due to expired attachment under Gujarat VAT Act

The court allowed the writ application, ordering HDFC Bank, Ahmedabad, to permit the petitioner to operate the frozen bank account as the provisional ... Provisional attachment of Bank Accounts - Section 45 of the VAT Act, 2003 - HELD THAT:- Sub-clause (2) of the Section 45 of the VAT Act, 2003 makes it very clear that the provisional attachment would cease to have effect after the expiry of period of one year from the date of the order made under sub-section (1). It appears that no fresh order has been passed after the first order dated 15.06.2016 came to be passed. It is very unfortunate that the HDFC Bank also has not permitted the writ applicant to operate her account, despite the fact that the provisional attachment cannot be said to exist on this date. This writ application succeeds and is hereby allowed. Issues:1. Provisional attachment of bank account under Section 45 of the Gujarat VAT Act, 2003.Analysis:The judgment pertains to a writ application under Article 226 of the Constitution of India seeking to quash an order of provisional attachment dated 15.06.2016 issued by the Assistant Commissioner of Commercial Taxes under Section 45(1) of the Gujarat Value Added Tax Act, 2003. The order directed the freezing of a bank account maintained with HDFC Bank, Ahmedabad, belonging to the petitioner. The court noted that the provisional attachment would cease to have effect after one year from the date of the order unless a fresh order was passed. Since no fresh order was issued, the court found it unjust that the bank had not allowed the petitioner to operate the account despite the provisional attachment being invalid at the time of the judgment.The court referred to Section 45 of the VAT Act, 2003, which empowers the Commissioner to provisionally attach a dealer's property during assessment or reassessment proceedings to safeguard government revenue. Sub-section (2) of Section 45 specifies that such provisional attachments expire after one year from the date of the order. The court highlighted that in the absence of a subsequent order, the initial attachment order from 15.06.2016 had lost its legal effect. Consequently, the court allowed the writ application, ordering HDFC Bank, Ahmedabad, to permit the petitioner to operate the frozen bank account, as the provisional attachment was deemed no longer valid. The court thereby granted the relief sought by the petitioner and made the rule absolute, effectively setting aside the earlier order of provisional attachment.