High Court stays tax recovery under TNVAT Act, allows petitioner to operate bank account freely

The High Court granted a stay on further recovery of tax and penalty under the TNVAT Act, 2006 from the petitioner's bank account. The Court directed the Appellate Deputy Commissioner of Commercial Taxes to decide on the pending statutory appeal within twelve weeks. No coercive measures were to be taken against the petitioner, and any attachments on the bank account were to be lifted, allowing the petitioner to operate the account freely. The judgment did not impose any costs on the petitioner, and the related miscellaneous petition was closed.

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Issues:
Challenge to impugned proceedings for recovery of tax and penalty under TNVAT Act, 2006 despite pending statutory appeal and stay petition.

Analysis:
The petitioner challenged the impugned proceedings dated 13.02.2023 by the first respondent, which communicated to the second respondent bank about the due amount of Rs.40,96,402/- for arrears of tax and penalty under the TNVAT Act, 2006 for the years 2012-13 to 2016-17. The petitioner had filed a statutory appeal against the assessment order dated 20.01.2021 and made a pre-deposit before the Appellate Deputy Commissioner of Commercial Taxes. Despite the appeal and stay petition, the first respondent recovered Rs.28,49,000/- from the petitioner's bank account on 13.02.2023, causing the petitioner to challenge the recovery as arbitrary and illegal.

The High Court noted that the petitioner had filed a statutory appeal against the assessment order and paid the pre-deposit amount. However, the first respondent had already recovered a substantial sum from the petitioner's bank account. The petitioner feared that the penalty amount of Rs.20,48,201/- might also be recovered. The Court observed that when an appeal is pending, and the pre-deposit has been made, no further sums should be recovered. The Court, suo motu, impleaded the Appellate Deputy Commissioner of Commercial Taxes as the third respondent in the writ petition.

Considering the pending statutory appeal and the recovery made by the first respondent, the Court decided to grant a stay on any further recovery from the petitioner until the statutory appeal is disposed of by the newly impleaded third respondent. The Court directed the third respondent to pass final orders on the statutory appeal within twelve weeks. It ordered that no coercive steps should be taken against the petitioner for recovery based on the impugned proceedings dated 13.02.2023. The Court also instructed to lift any attachments on the petitioner's bank account and allowed the petitioner to operate the account with the second respondent bank. The judgment concluded by stating that no costs were to be incurred, and the connected miscellaneous petition was closed.

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