Conditional lifting of tax recovery attachment granted during appeal after substantial pre-deposit and further deposit safeguard revenue interests.

Recovery attachment under Rule 9(4) of the Tamil Nadu VAT Rules, 2007 may be lifted pending appeal under Section 51 of the Tamil Nadu VAT Act, 2006 where the assessee has already made a substantial pre-deposit and interim protection is justified by the circumstances. Here, the High Court granted conditional relief because 25% of the disputed tax had been deposited and the business had remained closed during the Covid-19 outbreak. The attachment was directed to be lifted on an additional deposit of Rs. 50,000, after which the recovery notice would stand automatically vacated, while the appellate authority retained power to pass appropriate orders to protect the revenue interest.

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Issues: Whether the attachment notice issued for recovery of the disputed tax demand under Rule 9(4) of the Tamil Nadu Value Added Tax Rules, 2007 should be lifted pending disposal of the appeal under Section 51 of the Tamil Nadu Value Added Tax Act, 2006.

Analysis: The petitioner had already deposited 25% of the disputed tax and the business was stated to have remained closed on account of the Covid-19 outbreak. In these circumstances, the attachment was considered capable of being lifted on a conditional basis. The relief was balanced against the revenue interest by directing further deposit of a specified amount, while clarifying that the appellate authority could still pass orders to secure the department's interest before deciding the appeal.

Conclusion: The attachment was ordered to be lifted conditionally on the petitioner depositing an additional sum of Rs.50,000, and the recovery notice would stand automatically vacated on such deposit.

Final Conclusion: The writ petition was disposed of with conditional relief against recovery, without affecting the pending appellate proceedings.

Ratio Decidendi: A recovery attachment may be lifted pending appeal where the assessee has already made a substantial pre-deposit and the circumstances justify interim protection, subject to further deposit to safeguard the revenue.

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