TaxTMI 
TaxTMI 
2022 (4) TMI 557
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..... G. Road, Ahmedabad and to any other bank where the petitioner No.1 has bank account; and" (b) Pending hearing and final disposal of this petition, this Honorable Court by way of ad-interim and/or interim relief be pleased to restrain the respondents to recover any amount from bank account number 00000010503343023 of SBI Bank; bank account of number 051754687001 and 071006084004 of HSBC and from any other bank account of the petitioner No.1 with respect to the notices dated 31.07.2021 and 02.08.2021 (Annexure - H colly) or any other similar notices, if any issued to any banks where the petitioner No.1 has its bank account; and (b.1) Pending hearing and final disposal of this petition, this Honorable Court by way of ad-interim and/or interim relief be pleased to restrain the respondents to recover any amount from any bank account of the petitioner No.1 in HSBC Bank with respect to the letter dated 05.08.2021 (Annexure - IA); and (c) Pending hearing and final disposal of this petition, this Honorable Court by way of ad-interim and/or interim relief be pleased direct the respondents to release the bank account number 00000010503343023 of SBI Bank; bank acco....
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....Registration No. is 24073403460. Kindly attach the balance of current/saving accounts and fixed depositsor any other kind of deposits based on the PAN NO: AAACW0387R. Also provide the KYC details for the same. You have to pay Rs. 49,80,05,122/-+ Interest to the same dealer. You possess the Rs. 49,80,05,122/-+ Interest on behalf of the said dealer. So, I State Tax Officer (2) Of Unit-8, Ahmedabad, as the power Vested to me U/s. 44.of Gujarat Value Added Tax Act-2003, order to Deposit Rs. 49,80,05,122/-+ Interest with Prescribed Challan at Government Treasury (or by e payment mode) within Seven days on receipt of this Notice and also provide the details of closing balance to the State Tax Inspector who has come to your bank then issue Demand Draft in favour of "SBI VAT A/C" as per available closing balance of aforementioned dealer (Refer Section 44 and 67(9)(1) of Gujarat Value Added Tax Act-2003), Also do provide the details of "PAN INDIA SEARCH" (Refer Section 70 of Gujarat Value Added Tax Act-2003). If Failing to comply with orders of this notice you are liable to penalty of Rs. 25,000/-(INR) (Refer Section 70 of Gujarat Value Added Tax Act- 2003). Place : Ahmedabad ....
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.... 8,75,51,140 77,88,753 7,97,62,387 Second appeal and stay application therein are filed under the Gujarat VAT Act and they are pending for final disposal. Total relating to disputed period 29,76,67,610 34,44,66,188 4,80,09,021 29,64,57,167 4,19,73,099 17,07,08,649 2006-07, 2008-09 and 2012-13 amount already recovered. 1,51,24,422 Therefore, outstanding after adjustment of recovered amt., pre-deposit & bank guarantee. 6,86,50,997 8 We have heard Mr. Tushar Hemani, the learned Senior Counsel assisted by Mr. Kuntal A. Parikh, the learned advocate appearing for the writ applicants and Mr. Utkarsh Sharma, the learned A.G.P. appearing for the State respondents. 9 Mr. Hemani made the following submissions: "(i) Indisputably, the respondent No.3 has not invoked the power under Section 45 of the VAT Act to attach the bank accounts of the writ applicant No.1 during the pendency of any proceedings of assessment or reassessment of turnover escaping assessment. (ii) The respondent No.3 has failed to frame an opinion for the purpose of protecting the interest ....
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....he government revenue. The power to levy a provisional attachment is draconian in nature. By the exercise of the power, a property belonging to the taxable person may be attached, including a bank account. The attachment is provisional and the statute has contemplated an attachment during the pendency of the proceedings under the stipulated statutory provisions noticed earlier. An attachment which is contemplated in Section 83 is, in other words, at a stage which is anterior to the finalization of an assessment or the raising of a demand. Conscious as the legislature was of the draconian nature of the power and the serious consequences which emanate from the attachment of any property including a bank account of the taxable person, it conditioned the exercise of the power by employing specific statutory language which conditions the exercise of the power. The language of the statute indicates first, the necessity of the formation of opinion by the Commissioner; second, the formation of opinion before ordering a provisional attachment; third the existence of opinion that it is necessary so to do for the purpose of protecting the interest of the government revenue; fourth, the issuan....
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.... be a valid formation of the opinion that a provisional attachment is necessary for the purpose of protecting the interest of the government revenue. 51. These expressions in regard to both the purpose and necessity of provisional attachment implicate the doctrine of proportionality. Proportionality mandates the existence of a proximate or live link between the need for the attachment and the purpose which it is intended to secure. It also postulates the maintenance of a proportion between the nature and extent of the attachment and the purpose which is sought to be served by ordering it. Moreover, the words embodied in sub-Section (1) of Section 83, as interpreted above, would leave no manner of doubt that while ordering a provisional attachment the Commissioner must in the formation of the opinion act on the basis of tangible material on the basis of which the formation of opinion is based in regard to the existence of the statutory requirement. While dealing with a similar provision contained in Section 4536 of the Gujarat Value Added Tax Act 2003 , one of us (Hon'ble Mr Justice MR Shah) speaking for a Division Bench of the Gujarat High Court in Vishwanath Realtor v Sta....
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.... Sr. No. Assessment Years Assessment orders passed on Total dues under VAT/CST Acts Appeals before 1^st appellate authority Appeals before Tribunal Status of appeals Time taken before 1^st appellate authority 1 2006-07 31.03.11 12,47,363 VAT 08.06.2011 Not approached Stay granted before 1^st appellate authority till 30.03.2012. 30.09.2011 2 2008-09 06.11.2012 3,36,198 VAT 20.11.2012 Not approached Rejected on 19.03.2018 before 1^st appellate authority. Application made on 10.01.2020 under "Vera Samadhan Yojna" benefit availed. 15.12.2013 30.06.2013 31.08.2013 15.11.2013 3 2011-12 31.03.2016 8,53,10.401/- 03.05.2016 Not approached Stay granted before 1^st appellate authority till 30.09.2019 30.06.2017 30.09.2019 4 2012-13 27.03.2017 1,85,80,473/- VAT Total dues 1,43,47,973/- Remaining dues 11,497,892/- CST 26.05.2017 16.07.2021 Stay till 31.10.2021 under VAT dues Appeal partly allowed by 1st appellate authority qua CST dues on 05.09.2019. Appeal before Tribunal pending 19.04.2019 04.07.2019 17.07.2019 27.08.2019 5 2013-14 19.02.2018 9,96,37,459/- VAT 16....
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....e on 06.08.2021. (Annexed herewith and marked as annexure R1 is the copy of order dated 06.08.2021 for defreezing the said bank accounts) And respondent authorities requested bank to deposit the said tax liabilities of the petitioner as mentioned in the notice. The relevant Sub-section which requires due consideration of this Hon'ble Court is Sub-section 1 Sub-clause (b). For the sake of convenience Section 44 Sub-section 1 Sub-clause (b) is reproduced herein below: "Section 44 - Special mode of recovery. - 44(1) Notwithstanding anything contained in any law or contract to the contrary, the Commissioner may, at any time or from time to time, by notice in writing, a copy of which shall be forwarded to the dealer at his last known address, require. (b) any person who holds or may subsequently hold monies for or on account of such dealer, to pay to the Commissioner, either forthwith upon the monies becoming due or being held or within the time specified in the notice (but not before the monies becomes due or is held as aforesaid) so much of the monies as is sufficient to pay the amount due by the dealer in respect of the arrears of tax, penalty or intere....
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....impugned notice dated 31.07.2021, attached in 'Annexure H (Colly.) along with the memo of the petition, issued by Respondent no.3, is clearly addressed to 'SBI Bank, Ashram Road, Ahmedabad". 7.3 Further, I categorically deny the assertion made in the said Reply that the impugned notices dated 31.07.2021 and 02.08.2021 received by the HSBC and SBI banks did not specify attachments of the said bank accounts as provisions of 'Section 44' have been exercised which pertains to 'special mode of recovery. It is submitted that the copies of the impugned notices as attached with the memo of the petition clearly show that the respondent has ordered the said banks to 'attach the balance of current/saving accounts and fixed deposit. 7.4 Furthermore, the respondent no.3 himself contradicts his above assertion, by stating in the reply, the fact that the bank accounts of petitioner no.1 are defreezed by his order dated 06.08.21. It is therefore, submitted, that if, respondent no.3 had not ordered for attachment of the bank accounts in the impugned notices, then the accounts would not have been de-freezed vide letter dated 06.08.2021 (attached in Annexure ....
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....ired under section 44(1), before issuing the notices of recovery of money to the banks under section 44(1)(b) of the GVAT Act. 8.1 Moreover, assuming not accepting, if the notices were forwarded by the Respondent no.3 to the Petitioner no.1, they were not forwarded to the correct last known address of petitioner no. 1 for the following reasons: (i) It is submitted that Petitioner no.1 got its Registration Certificate amended in September 2015 for a limited period and thereby, 1 Floor. P.G Warehouse, Bajrang Lane, Aslali Village, Ahmedabad (for short "Aslali") address was added to the Registration Certificate. (List of amendments and Amendment History detail are attached herewith and marked as Annexure M Colly.). Later the Petitioner no.1 removed 'Aslali' address from its Registration Certificate because it had no business whatsoever from 'Aslali'. This fact transpires from Registration Certificates dated 21.05.2016 issued under the GVAT Act and CST Act which are already attached as Annexure A and Annexure B with the memo of the petition. Thus, it is clear that the address of 'Aslali' has been replaced by address of '1" Floor, Chakravarti Co....
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....r hearing and dispose them off on their own merits within a period of two months from today. 16 However, before closing this order, we must once again eradicate the misconception of law in the mind of the department as regards Section 44 of the GVAT Act, 2003. All the impugned notices issued to the banks is on the basis of Section 44 of the GVAT Act. This is also evident from the affidavit-in-reply filed on behalf of the department. Recently, in the case of Shri Shakti Cotton Pvt. Ltd. vs. The Commercial Tax Officer [Special Civil Application No.12788 of 2021 decided on 23rd March 2022]. We had the occasion to explain the scope and true purport of Section 44 of the GVAT Act. We quote the relevant observations as under: "12. Section 44 of the GVAT Act reads thus : "44. (1) Notwithstanding anything contained in any law or contract to the contrary, the Commissioner may at any time or from time to time , by notice in writing, a copy of which shall be forwarded to the dealer at his last known address, require, - (a) any person from whom any amount of monies is due, or may become due, to a dealer on whom notice has been served under sub-section (1), or ....
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....aler for payment of the amount of such monies towards the outstanding amount of tax, interest and penalty payable by the dealer." 13. The aforesaid provisions of Section 44 of the GVAT Act are almost pari materia to Section 226(3) of the Income Tax Act, 1961 (for short, "the Act, 1961"). Section 226(3) reads thus: "226. Other modes of recovery: ... ... (3) (i) The Assessing Officer or Tax Recovery Officer may, at any time or from time to time, by notice in writing require any person from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee, to pay to the Assessing Officer or Tax Recovery Officer either forthwith upon the money becoming due or being held or at or within the time specified in the notice (not being before the money becomes due or is held) so much of the money as is sufficient to pay the amount due by the assessee in respect of arrears or the whole of the money when it is equal to or less than that amount. (ii) A notice under this sub- section may be issued to any person who holds or may subsequently hold any money for or on acco....
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.... be fully discharged from his liability to the assessee to the extent of the amount so paid. (ix) Any person discharging any liability to the assessee after receipt of a notice under this sub-section shall be personally liable to the Assessing Officer or Tax Recovery Officer to the extent of his own liability to the assessee so discharged or to the extent of the assessee's liability for any sum due under this Act, whichever is less. (x) If the person to whom a notice under this sub- section is sent fails to make payment in pursuance thereof to the Assessing Officer or Tax Recovery Officer, he shall be deemed to be an assessee in default in respect of the amount specified in the notice and further proceedings may be taken against him for the realisation of the amount as if it were an arrear of tax due from him, in the manner provided in sections 222 to 225 and the notice shall have the same effect as an attachment of a debt by the Tax Recovery Officer in exercise of his powers under section 222." 14. The above referred Section 226(3) of the Act, 1961 is modelled upon the provision of the Australian Act, Section 218. It is need less to reproduce the cor....
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....ntly hold money for or on account of such dealer." "20. We may also refer to a Division Bench decision of this High Court in the case of Green Berry Foils India Limited vs. State of Gujarat (Special Civil Application No.15644 of 2018, decided on 17th October 2019), more particularly, paragraphs 18 and 19 respectively : "18. On a plain reading of the provisions of section 44 of the GVAT Act, it is clear that the same are in the nature of garnishee proceedings and can be invoked against any person from whom any amount is due, or may become due, to a dealer. Such dealer should be a person to whom notice has been served under subsection (1) of section 44 of the GVAT Act. The third respondent in the affidavit-in-reply filed by it has not made reference to any such notice having been issued to it nor has any averment to that effect been made in the affidavit-in-reply filed on behalf of the first respondent. Therefore, the basic requirement for invoking the provisions of section 44 of the GVAT Act, viz. service of notice to the dealer under sub-section (1) thereof, has not been satisfied. 19. Another aspect of the matter is that a condition precedent for issuing....