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2015 (5) TMI 296

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..... he impugned order of provisional attachment of the bank account of the petitioners including the personal bank account of the pet No.2 has been passed Impugned order of provisional attachment of the bank accounts of the petitioner including the personal bank account of the petitioner No.2 and the impugned garnishee notice served upon the respondent No.3-Punjab National Bank and the banker of the petitioners are absolutely illegal and most arbitrary. In the present case, the exercise of powers by the respondent No.2 under Sections 45 and 44 of the VAT Act is nothing but an abuse of powers by the respondent No.2 and undue harassment to the petitioners. Under the circumstances, this is a fit case to impose exemplary cost upon the respondent No.2 while allowing the present petition and quashing and setting aside the impugned orders. - Decided in favour of appellant. - SPECIAL CIVIL APPLICATION NO. 7210 of 2015 - - - Dated:- 29-4-2015 - MR. M.R. SHAH AND MR. S.H.VORA, JJ FOR THE PETITIONER : MR SN SOPARKAR SR.ADV. WITH MR UCHIT N SHETH, ADVOCATE FOR THE RESPONDENT : MR CHINTAN DAVE AGP JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1. Rule. Shri Chintan D .....

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..... m Vishwanath Developer had only acted as consultant for construction projects and it was not involved in any construction activity. According to the petitioners, the construction project in the case of Vishwanath Infrastructure was over in the year 2009-2010 but since there are some outstanding payments, the firm is yet to be dissolved. According to the petitioners, the petitioners thereafter, produced accounting records from the accounting year 2009-2010 till date. That, when the Assessing Officer required the petitioners to produce records for the years 2007- 2008 and 2008-2009, the petitioners informed the concerned officer that they have required to maintain books of accounts and records only for a period of 6 years and, therefore, the records of the earlier years were not available with them. The Assessing Officer further proceeded to calculate liability of the old firms under the VAT Act on presumptive basis. According to the Assessing Officer, the cumulative liability of the old firms under the VAT Act comes to ₹ 4.50 crores. It is the case on behalf of the petitioners that though the liability of the petitioners was determined in an arbitrary manner, the petitione .....

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..... already attached by the Assessing Officer. It is submitted that even as per the calculation of the department, cumulative liability of all the partnership firms in which, the 2nd petitioner was a partner, would be ₹ 4.5 crores. It is submitted that, therefore, the Revenue is/was thus sufficiently secured by attachment of the immovable property. It is submitted that, therefore, the impugned order dated 15.04.2015 provisionally attaching the bank accounts of the petitioners and garnishee notice dated 15.04.2015 issued under Section 44 of the VAT Act for making recovery from the bank accounts of the petitioners are absolutely illegal and most arbitrary. 5.2. Shri Soparkar, learned Senior Counsel appearing on behalf of the petitioners has vehemently submitted that in the present case, the liability of the petitioners under the VAT Act is yet to be adjudicated and/or crystallized and as on today, no order of assessment has been passed against the petitioners determining the liability of the petitioners. It is submitted that still, considering the fact that the cumulative liability might be ₹ 4.5 crores, the petitioners voluntarily offered the immovable property worth  .....

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..... crores was already under attachment and, therefore, the impugned order of provisional attachment of the bank accounts of the petitioners including the personal bank account of the petitioner No.2, is/are absolutely illegal, most arbitrary and perverse. 5.6. It is submitted that accordingly even the garnishee notice served upon the bank for recovery of the amount lying in the bank accounts of the petitioners issued under Section 44 of the VAT Act, also cannot be sustained as the same is arbitrary and perverse and consequently, the same also deserves to be quashed and set aside. 5.7. It is further submitted by Shri Soparkar, learned Senior Counsel appearing for the petitioners that even otherwise, the impugned garnishee notice issued under Section 44 of the VAT Act is absolutely illegal and most arbitrary. It is submitted that in the present case, the assessment proceedings are yet pending adjudication. It is submitted that as on today, no order has been passed against the petitioners with respect to any tax liability and/or interest and penalty under the VAT Act. It is submitted that, therefore, the petitioners cannot be said to be in arrears of tax, penalty or interest under .....

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..... dents is not in a position to defend the action of the respondents in passing the impugned orders of provisional attachment of the bank accounts of the petitioners including the personal bank account of the petitioner No.2 and even the impugned garnishee notice. 7. Heard the learned advocates appearing on behalf of the respective parties at length. 8. At the outset, it is required to be noted that by way of this petition under Article 226 of the Constitution of India, the petitioners have prayed for an appropriate writ, order or direction to quash and set aside the impugned orders of provisional attachment of the bank accounts of the petitioners as well as the personal bank account of the petitioner No.2 and also to quash and set aside the impugned garnishee notice with respect to bank accounts of the petitioners. 8.1. At the outset, it is required to be noted that as such, the assessment proceedings are yet pending. Therefore, the liability of the petitioners under the VAT Act is yet to be adjudicated upon and/or crystallized. It is not in dispute that at the most, on completion of the assessment proceedings, the liability of the petitioners would be approximately ₹ .....

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..... have effect after the expiry of a period of one year from the date of the order made under sub-section (1). 8.3. Section 45 of the VAT Act confers powers upon the Commissioner to pass the order of provisional attachment of any property belonging to the dealer during the pendency of any proceedings of assessment or reassessment of turnover escaping assessment. However, the order of provisional attachment can be passed by the Commissioner when the Commissioner is of the opinion that for the purpose of protecting the interest of the Government Revenue, it is necessary so to do. Therefore, before passing the order of provisional attachment, there must be an opinion formed by the Commissioner that for the purpose of protecting the interest of the Government Revenue during the pendency of any proceedings of assessment or reassessment, it is necessary to attach provisionally any property belonging to the dealer. However, such satisfaction must be on some tangible material on objective facts with the Commissioner. In a given case, on the basis of the past conduct of the dealer and on the basis of some reliable information that the dealer is likely to defeat the claim of the Revenue in .....

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..... as under:- 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 (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 interest under this Act, or the whole of the money when it is equal to or less than that amount. Explanation.-- For the purposes of this subsection, the amount of monies due to a dealer from, or monies held for or on account of a dealer by any person, shall be calculated by the Commissioner after deducting therefrom such claims, if any, lawfully subsisting, as may have fallen due .....

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..... impugned order of provisional attachment of the bank accounts of the petitioner including the personal bank account of the petitioner No.2 and the impugned garnishee notice served upon the respondent No.3-Punjab National Bank and the banker of the petitioners are absolutely illegal and most arbitrary. In the present case, the exercise of powers by the respondent No.2 under Sections 45 and 44 of the VAT Act is nothing but an abuse of powers by the respondent No.2 and undue harassment to the petitioners. Under the circumstances, this is a fit case to impose exemplary cost upon the respondent No.2 while allowing the present petition and quashing and setting aside the impugned orders. 12. In view of the above and for the reasons stated above, the present petition succeeds. The impugned orders dated 15.04.2015 provisionally attaching the bank accounts of the petitioners including the personal bank account of the petitioner No.2 as well as the impugned garnishee notice dated 15.04.2015 are hereby quashed and set aside. However, the provisional attachment order with respect to the immovable property worth ₹ 5 crores i.e. property No.132/FF/101, 101, Vishwanath, Opp.Sammundar-2, .....

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