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2015 (9) TMI 1153 - BOMBAY HIGH COURT

2015 (9) TMI 1153 - BOMBAY HIGH COURT - TMI - Attachment of bank accounts provisionally - alleged huge tax liability - dispute is related to rate of tax on rigid frame steel structures - There was no dispute with the Revenue until the financial year 2010-2011. The Petitioner thereafter relying upon a judgment of the Rajasthan High Court started charging VAT at the rate of 5% and not 12.5% on rafters and rigid frame columns. - Held that:- Learned Senior counsel for the Petitioner, on instructions .....

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ents made by the learned Senior Counsel, on instructions, are enough to protect the interest of the revenue at this stage. There is no need of continuing the provisional attachment ordered by the Joint Commissioner vide Exhibit-A to the Petition.

By accepting the statement made by the learned Senior Counsel as an undertaking given to the Court and directing that movable and immovable Assets and properties of the Petitioner shall not be disposed of, transferred and no third party inter .....

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Sr Counsel a/w Mr Prakash Shah, Mr Jas Sanghavi, Mr Rahul Thakkar, Mr Puneet Ganapathy For the Respondent Rep by: Mr Vikas Mali, AGP and Mr V A Sonpal, Special Counsel ORDER P. C. This Petition is taken out of turn on account of the urgency pointed out, namely, that by order at Exhibit-A to the Writ Petition pages 33 to 36, the Joint Commissioner of Sales Tax, VAT Administration, Pune Division Pune, has attached provisionally the bank accounts of the Petitioner/dealer for the alleged tax liabili .....

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nch, New Delhi 0901102000022701 8 IDBI N. G. Road, Cochi, Cochin 0084102000020730 9 IDBI Banjara-Hills, Hyderabad br. 028102000015358 10 IDBI NelsonManickum Rd. Chennai br. 045102000029962 11 IDBI NelsonManickum Rd. Chennai br. 045102000016694 12 IDBI Mission Road, Banglore 008102000044101 2. The order directs that the amounts shall remain provisionally attached until further orders. Any amount shall not be paid, unless this order is withdrawn or communication to that effect is made by the Joint .....

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er shall however, be at liberty to produce any documents, papers or books of accounts and appear before the Joint-Commissioner of Sales Tax (VAT Administration) Pune inperson within 15 days from the service of this order to justify the withdrawal of this order, failing which this order shall be absolute. This order is to remain in operation for 12 months from the date of service on the dealer and may be extended further from time to time for a period of two years. 3. By consent of parties, this .....

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heir functions in terms of the MVAT Act, 2002. 4. After setting out as to how the Petitioner is a manufacturer of the product, in paragraph 4, it is stated that the Petitioner has one registered office in Kharadi and a factory both in Pune. The Petitioner has been filing returns and discharging due liability under the MVAT Act, 2002 since 2007-2008. The Petitioner is pointing out as to how the activity is based on the customer and geographical requirements and that a particular process is undert .....

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mers until the year 2011 at the rate of 12.5.% on account of rigid frame columns and rafters and remitting the same to the Revenue. On the rest of the products, the Petitioner had been collecting VAT from its customers at the rate of 4 or 5%, as applicable, and remitting the same to the Revenue. There was no dispute with the Revenue until the financial year 2010-2011. The Petitioner thereafter relying upon a judgment of the Rajasthan High Court started charging VAT at the rate of 5% and not 12.5 .....

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all under the entry claimed by the Petitioner, and therefore, liable to be taxed at the residual rate of 12.5%. Against this order, an Appeal was filed by the Petitioner in 2013 itself and it is common ground that this Appeal is pending before the Maharashtra Sales Tax Tribunal. 6. A search and seizure notice was issued on 10th August, 2015, and records and information as requested by the Sales Tax Department came to be produced. Some of the documents were seized. The seized documents are stored .....

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e department attaching their bank accounts. 7. It is in that context and disputing the findings in the impugned order that this Petition has been filed and an urgent application was made so as to release the bank accounts from the attachment. 8. Mr Sridharan, learned Senior counsel appearing for the Petitioner submitted before us that the order passed does not take into account that the Petitioner is a solvent company having sufficient assets in the State of Maharashtra. The Petitioner, therefor .....

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tigation and that the order of the nature contemplated by Section 35 has to be passed only subsequent to the assessment order. In the present case, there is no warrant for passing of any order in August, 2015 when the DDQ by the Commissioner has been done nearly two years back and appeal from the determination order is pending before the Tribunal. Thus, there are no extraordinary circumstances which required the Revenue to take recourse to Section 35 of the MVAT Act, 2002. Therefore, this action .....

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order in writing, any money due or which may become due to the dealer from any other person or any money which any other person holds or may subsequently hold for or on account of dealer in this case. Thus, the power, authority and jurisdiction of the Joint Commissioner has not been challenged. If any order has been passed under subsection (1) and served, then, by subsection (5) of Section 35 there is remedy provided and the Commissioner may modify or cancel that order. An Appeal against such an .....

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a frivolous dispute which has been determined by the Commissioner. In the teeth of such overwhelming adverse material, the Petitioner cannot be heard to say that the Joint Commissioner could not have acted in order to protect the interest of the Revenue, was the submission of Mr Sonpal. He therefore submitted that, on merits as well, this Writ Petition be dismissed. 11. Alternatively and without prejudice, Mr Sonpal submits that if this Court is inclined to vacate the impugned order and set asi .....

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lated to recovery of any amount due, in respect of any person or dealer or during any inspection or search in relation to the business of any person or dealer under this Act, the Commissioner is of the opinion that for the purpose of protecting the interests of the revenue it is necessary so to do, then he may, notwithstanding anything contained in any law for the time being in force or any contract to the contrary, attach provisionally by order in writing any money due or which may become due t .....

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al attachment shall cease to have effect after the expiry of a period of one year from the date of service of the order issued under subsection (1): Provided that, the Commissioner may, for reasons to be recorded in writing, extend the aforesaid period by such further period or periods as he may think fit, so, however that the total period of extension shall not in any case exceed two years. (3) The powers under this section shall be exercised by the Commissioner himself or the Additional Commis .....

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the said person or the dealer makes an application in the prescribed form to the Commissioner within fifteen days of the date of service of the order specified in subsection (1), or as the case may be, within fifteen days of the date of service of the order extending the period under subsection (2), then the Commissioner, after affording such person or dealer a reasonable opportunity of being heard, and, having regard to the circumstances of the case, may confirm, modify or cancel the order. (6) .....

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MVAT Act, 2002, the Commissioner ought to form an opinion that for the purpose of protecting interest of the Revenue, it is necessary to pass an attachment order provisionally. Foundation for the action thus, is the recovery of the amount due and the opinion of the Commissioner that for the purpose of protecting interest of the Revenue, this drastic action is needed. It is not an absolute power and which could be exercised without recording the requisite opinion and on the above material counts. .....

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n alternate remedy is not an absolute bar against entertaining a Writ Petition under Article 226 of the Constitution of India. It is more a rule of caution and prudence rather than a legal bar. Therefore, whether the Petitioner should be relegated to the alternate remedy, is a matter left to the discretion of the Court exercising powers under Article 226 of the Constitution of India. Considering the impact of the impugned order and the drastic consequence thereof, we do not think that the Petiti .....

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of premises. On the date of the impugned order these proceedings were in progress. Thereafter, the Joint Commissioner proceeds to verify the records and holds that the dealer has misclassified its product and sold it at an incorrect tax rate. This was the discrepancy noticed during the course of the investigating visit. According to him, the dealer has failed to act as per the provisions of law. We find absolutely no reference made by the Joint Commissioner to the admitted and undisputed factua .....

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#39;s order is of 9th July, 2013 and against which an Appeal has been preferred by the Petitioner in the Tribunal which is pending since September 2013, then, we do not see what was the occasion to exercise the powers under Section 35. It may be that a search of the premises was conducted and that production and inspection of accounts and documents was directed, and thereafter, the same came to be referred to, but by that itself, and without making any reference to the debatable issues, we do no .....

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on under Section 64 of the MVAT Act, 2002. We do not think that the Commissioner needed to exercise this power in order to protect the interest of the Revenue. If the Joint Commissioner was of the opinion that revenue involved is to the tune of more than ₹ 45 Crores, and that is required to be secured, then, he could have ensured security of the same by appropriate proceedings including by an Application in the pending Appeal. That Authority could have obtained an undertaking and thereby e .....

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r is ready and willing to make a statement that unless and until the proceedings under the Act including an Appeal preferred by the Petitioner is disposed of, it would not create any third party right, part with possession of the assets and properties including the above plant and machinery and building. However, that should not prevent the Petitioner from utilizing the same in the ordinary and normal course of business. 16. We are of the opinion that the statements made by the learned Senior Co .....

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