TMI Blog2015 (11) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... ances, the court is not inclined to interfere with the provisional attachment made by the respondent at this stage. - Petition disposed of. - Special Civil Application No. 11268 of 2015 - - - Dated:- 21-9-2015 - Harsha Devani And A G Uraizee, JJ. For the Petitioner : Mr Tushar P Hemani, Adv. and Ms Vaibhavi K Parikh, Adv For the Respondent : Ms Manisha Lavkumar, Govt Pleader with Ms Maithili Mehta, Asstt Govt Pleader JUDGMENT ( Per : Honourable Ms. Justice Harsha Devani ) 1. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the order dated 9.5.2014 passed by the Deputy Commercial Tax Commissioner, Circle-7, Gandhinagar, whereby the refund application filed by the petitioner has been rejected. The petitioner has also prayed for a direction to the respondent No.3 to expedite the hearing of the appeal at Annexure-I and also seeks a direction to the respondent No.4 to lift the attachment and release the bank accounts of the petitioner. 2. The petitioner is a proprietary concern engaged in the business of cigarettes. The petitioner is registered as a dealer under the Gujarat Value Added Tax Act, 2003 (hereinaft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period 1.1.2014 to 31.3.2014. After a lapse of about six months, the petitioner received a letter dated 15.11.2014 from the respondent No.3 calling for certain information with respect to the refund application filed for the second quarter. In the meanwhile, the petitioner filed an application for provisional refund for the first quarter of the year 2014-15, namely, for the period 1.4.2014 to 30.6.2014 amounting to ₹ 7,13,41,643/-. Pending adjudication of the above refund application, the petitioner filed an application for refund of ₹ 20,98,737/- for the second quarter, namely for the period 1.7.2014 to 30.9.2014. Since there was no response from the respondent No.3, the petitioner addressed letter dated 17.4.2015 to the third respondent for releasing the refund amount as claimed by the petitioner for the above referred period. However, there was no response to the same. 3. It appears that pending adjudication and assessment of refund applications of all the four quarters, a search came to be carried out at the premises of the petitioner on 22.4.2015, which went on till 23.4.2015, in which, all the books of accounts and all other documents were confiscated by the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereunder; and lastly, that the attachment of the bank accounts of the petitioner simultaneously with the issuance of notice of provisional attachment, is bad in law. It has been contended that no order in writing has been made forming the basis of such a huge demand. It was contended that the opinion which is required to be formed by the concerned officer is a judicial opinion and in the absence of any assessment or provisional assessment, no such attachment order can be passed. It was also contended that the notice for provisional assessment had been issued solely with a view to attach the petitioner's bank accounts, inasmuch as, without waiting for the first date of hearing, in a hot haste, attachment has been ordered. 4.1 In support of his submission, the learned counsel placed reliance upon the decision of the Bombay High court in the case of Gandhi Trading v. Assistant Commissioner of Income Tax and others, (1999) 239 ITR 337, for the proposition that the power of attachment under section 281B of the Income Tax Act, 1961 is in the nature of attachment before judgment under the Code of Civil Procedure. It is a drastic power. It, should, therefore, be exercised with ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h due care and in appropriate cases. Subsection (2) of Section 45 when specifies the life of such order of provisional assessment for a maximum period of one year, it further amplifies that the same is in the nature of a drastic measure for a temporary period. The authority exercising such powers, therefore, must have a strong prima facie case to show that upon ultimate conclusion of the assessment, there is every likelihood of tax, interest and/or liability being attached on a dealer, and further that pending such consideration, it is necessary in the interest of Government revenue to pass order of provisional attachment. Such powers cannot be exercised in a routine manner in every case of reopening of assessment de hors the consideration noted above and in any case not merely because some assessment proceedings are pending. At that stage, it is merely a prima facie, ex-parte opinion of the assessing authority that a certain tax demand is likely to arise. This would be subject to bi-parte assessment proceedings. Even after the assessment is done, it is subject to further appeals, typically first before the Commissioner and thereafter before the VAT Tribunal and the High Court. At ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be discouraged. It was, accordingly, urged that the respondents authorities were not justified in provisionally attaching the petitioner's bank accounts in exercise of powers under section 45 of the GVAT Act without duly recording any satisfaction for exercising such drastic powers. 5. Opposing the petition, Ms. Manisha Lavkumar, learned Government Pleader emphatically argued that the entire operations of the petitioner give rise to a suspicion that there are various irregularities and illegalities in the transactions entered into by the petitioner for the sale of cigarettes. Reference was made to the contents of the affidavits filed on behalf of the respondents from time to time, to point out that upon investigation being carried out by the flying squad at Delhi with the dealers with whom the petitioner has entered into transactions as per the documents submitted by it, it has been revealed that the dealers who purchased the cigarettes from the petitioner do not exist at the place of business. Besides, a comparison of the GVAT returns filed by the petitioner and the dealers respectively, for the quarters in question, reveal that they do not tally with the amount of sale and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner. Thereafter due to re-division of Joint Commissioner in the State of Gujarat, the file came to be transferred to Gandhinagar Division-3 in the month of October, 2014. It appears that subsequently by a letter dated 29.1.2015 the petitioner was called for re-hearing of the appeal to which the petitioner objected. In this regard, while at the relevant time, it was the stand of the respondent that the appeal was required to be reheard, subsequently in view of the fact that the first appellate authority, namely, then Joint Commissioner had already delivered and signed the order, the learned Government Pleader, under instructions from the respondents stated that the said order passed by the Joint Commissioner, Division-I would be communicated to the petitioner. Under the circumstances, the prayer for directing the first appellate authority to dispose of the appeal filed by the petitioner no longer survives. 7. As regards the second contention raised before the court, namely, that the refund applications filed by the petitioner are not being disposed of within the statutory time limit, the learned Government Pleader has stated before the court that such applications shall be proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he may by an order in writing attach provisionally any property belonging to the dealer in such manner as may be prescribed. 11. In Automark Industries (I) Ltd. vs. State of Gujarat (supra), this court in the context of section 45 of the GVAT Act has observed that few things emerge from these statutory provisions. Firstly, the power of provisional attachment is in the nature of an extra-ordinary measure available to the revenue authorities for the purpose of protecting interest of Government revenue. Even before any assessment is made, such powers can be exercised if the Commissioner is of the opinion that for the purpose of protecting the interest of Government revenue, it is necessary to do so. The power thus, is of drastic nature. Any such power, therefore, is coupled with the duty to exercise such power with due care and in appropriate cases. Sub-section (2) of Section 45 when specifies the life of such order of provisional assessment for a maximum period of one year, it further amplifies that the same is in the nature of a drastic measure for a temporary period. The authority exercising such powers, therefore, must have a strong prima facie case to show that upon ultimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with the provisional attachment made by the respondent at this stage. 13. In the light of the above discussion, the petition is disposed of in the following terms. 13.1 The respondent authorities shall forthwith communicate the order passed on the first appeal preferred by the petitioner against the rejection of the refund applications made by it. The respondents shall process and decide the refund applications filed by the petitioner within a period of four weeks from the date of receipt of a copy of this order. Needless to state the petitioner shall cooperate in the proceedings so as to enable the authorities to decide the refund applications within the time frame stipulated by this court. The respondents are further directed to conclude the provisional assessment proceedings within a period of five weeks from today. The petitioner shall duly cooperate in the said proceedings. If despite the cooperation of the petitioner, the proceedings are not concluded within the aforesaid time frame, it would be open for the petitioner to approach this court for the purpose of lifting the provisional attachment of its bank accounts. 14. Subject to the aforesaid observations and dir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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