2022 (5) TMI 307 - HC - VAT and Sales Tax

High Court emphasizes procedural fairness in tax assessment, sets conditions for lifting bank account attachment

M/s. Excel Engineering Enterprises Versus The Assistant Commissioner (ST), The Branch Manager

The High Court directed the appellant to treat assessment orders as show cause notices, submit objections, and provide a personal hearing before redoing ... Validity of assessment order - Levy of entry tax and penalty - paver finisher purchased by the appellant from a dealer in Gujarat - purchase omission and consequential sales suppression - HELD THAT:- It appears that the assessment order passed by the first respondent for the assessment year 2015-16 levying entry tax and the assessment orders dated 28.03.2018 passed by the first respondent for the assessment years from 2012-2013 to 2015-16 under the TNVAT Act, 2006, were set aside by this court vide orders dated 12.06.2018 and 19.06.2018 respectively. Thereafter, no assessment order afresh was passed by the first respondent till date. While so, the first respondent by proceedings dated 07.03.2022, directed the second respondent to attach the bank account of the appellant for the tax liability, which was challenged in WP.No.7138 of 2022 and the said writ petition was disposed of, by the order impugned herein. It is not in dispute that the appellant has paid 15% of the disputed tax, as directed by the learned Judge, in the order dated 19.06.2018 in WP.Nos.13329 to 13332/2018. However, what was disputed on the side of the respondents is the objections dated 02.08.2018 said to have been filed by the appellant. In view of the same, the learned Judge directed the appellant to pay another 50% of Rs.42,00,000/- representing the balance tax demand & penalty, for the purpose of lifting the attachment made on its bank account. It is the grievance of the appellant that they have been facing serious financial crisis and due to the attachment of the bank account, they could not run their business and meet out the day today activities. This court, to sub-serve the interests of justice, is inclined to modify the order dated 24.03.2022 passed in WP.No.7138 of 2022 by reducing the payment of 50% of Rs.42,00,000/- to Rs.15,00,000/- alone and is accordingly, modified. The other directions / conditions issued therein qua passing of the assessment orders, lifting the bank attachment etc. remain unaltered. The time for payment of Rs.15,00,000/- by the appellant is six weeks from the date of receipt of a copy of this judgment. Appeal disposed off. Issues involved:1. Assessment orders passed without notice2. Disputed tax payments and objections filing3. Bank account attachment without fresh assessment ordersAnalysis:Issue 1: Assessment orders passed without noticeThe appellant contended that assessment orders were issued without prior notice, leading to objections and legal challenges. The High Court directed the appellant to treat the orders as show cause notices, submit objections, allow inspection, and provide a personal hearing before redoing the assessment in compliance with the law. The Court emphasized refraining from coercive action until the assessment was completed, ensuring procedural fairness.Issue 2: Disputed tax payments and objections filingFollowing the directions in the writ proceedings, the appellant paid 15% of the disputed tax and submitted objections. However, the appellant highlighted the lack of a personal hearing as directed by the court. Subsequently, the bank account attachment by the first respondent without fresh assessment orders caused financial distress to the appellant, impacting their business operations significantly.Issue 3: Bank account attachment without fresh assessment ordersThe first respondent attached the appellant's bank account based on previous orders without passing fresh assessment orders. The appellant challenged this action through a writ petition, leading to the court's decision to remit the matter for reconsideration. The Court set conditions for depositing a specified amount within a deadline to lift the attachment, emphasizing the importance of fair assessment proceedings and providing an opportunity to be heard.In the final judgment, the High Court modified the order by reducing the payment amount required to lift the bank attachment, considering the appellant's financial difficulties. The Court aimed to balance the interests of justice by ensuring a reasonable payment timeframe while upholding the necessity for proper assessment procedures and fair treatment of the appellant.