Coercive tax recovery stayed where exemption and rectification issues remained pending over chewing tobacco sales demand.

Chewing tobacco sales were treated as exempt for the relevant period, and the assessee had already pursued rectification under Section 84 of the Tamil Nadu Value Added Tax Act, 2006, with allied proceedings still pending. In that setting, the Madras HC indicated that coercive recovery was not justified while the demand remained under challenge and the corrective process had not been completed. The attachment was therefore treated as improper, the amount recovered was directed to be re-credited, and the assessing authority was asked to consider the rectification petition and keep further coercive steps in abeyance pending statutory proceedings.

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Issues: Whether the demand and bank attachment relating to chewing tobacco sales could be sustained when the assessee claimed exemption for the relevant period and rectification and revision proceedings were pending.

Analysis: Chewing tobacco was treated as exempt during the period covered by the demand, and the record showed that the issue had already been the subject of earlier proceedings and interim protection in similar matters. The assessee had also moved a rectification petition under Section 84 of the Tamil Nadu Value Added Tax Act, 2006, which had not yet been disposed of. In these circumstances, coercive recovery by way of attachment was not warranted until the statutory and corrective proceedings were completed.

Conclusion: The attachment and recovery were held to be improper, the amount recovered was directed to be re-credited, and the assessing authority was directed to consider the rectification petition and keep coercive steps in abeyance.

Final Conclusion: The writ petition was disposed of with protective and consequential directions in favour of the assessee, leaving the tax dispute to be decided through the pending statutory proceedings.

Ratio Decidendi: Coercive recovery should not be pursued where the demand itself is under challenge and rectification or allied statutory proceedings remain pending, particularly when the levy is disputed as time-barred or exempt for the relevant period.

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