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2015 (11) TMI 1016 - GUJARAT HIGH COURT

2015 (11) TMI 1016 - GUJARAT HIGH COURT - [2016] 88 VST 295 (Guj) - Recovery proceedings where appeal is pending before the appellant authority - Attachment of bank accounts - section 44 of the Gujarat Value Added Tax Act, 2003 - Held that:- While it is true that under rule 27 of the rules, the respondent is empowered to call upon the petitioner to pay the amount assessed within a period of thirty days from the date of service of such notice, however, when the petitioner has preferred an appeal .....

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rt of the demand covered under the notice or may be even granted complete unconditional stay. Under the circumstances, it is expected of the fourth respondent to stay his hands till the stay application of the petitioner is decided, unless the stay application is not decided on account of default on the part of the petitioner or it is found that the petitioner is unnecessarily delaying the hearing of the stay application. However, in the absence of any exceptional circumstances, there is no warr .....

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from the vice of non-application of mind, inasmuch as, in the notices issued to each of the banks, the fourth respondent has sought to recover the entire demand covered under the notice from each of the banks. - The impugned orders dated 17.7.2015, 9.6.2015 and 17.7.2015 (Annexure-E collectively to the petition) as well as the impugned orders dated 11.9.2015 Annexure-R-III Collectively, to the affidavit in reply of the respondent cannot be sustained. - Decided in favour of assessee. - Special Ci .....

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the respective parties, the petition is taken up for final hearing today. 3. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the orders dated 21.7.2015, 22.7.2015, 10.8.2015 (Annexure-E Collectively) relating to year 2010-11 issued by the respondents under section 44 of the Gujarat Value Added Tax Act, 2003 attaching the bank accounts of the petitioner and directing the petitioner to pay the amount demanded under the said notice to the fourth respon .....

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ration, was receiving goods from the manufacturer under Form C and the dealer was re-selling the goods in Gujarat without carrying out any further process and accordingly, classified the goods under the Gujarat VAT Schedule II vide entry 42A at Entry No.145 as per notification dated 31.3.2006. The petitioner filed the monthly returns for the period in question and the returns were assessed by the Commercial Tax Officer (3) Unit 22 (respondent No.4 herein) in the year 2012 without demanding any d .....

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ssioner of Commercial Tax (Appeals) under section 73 of the Act on 6.7.2015, well within the period of limitation. However, during the pendency of the hearing of the stay application and the appeal, the fourth respondent issued attachment orders dated 21.7.2015, 22.7.2015 and 10.8.2015 attaching the bank accounts operated by the petitioner at the Naroda branch of Bank of India, Yavatmal Branch of Bank of India and Nagpur Branch of Bank of India in Maharashtra, respectively. 5. On 27.7.2015, the .....

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onse to the notice issued by this court, an affidavit-in-reply came to be filed by the fourth respondent stating that while in relation to year 2010-11, the first appellate authority had granted stay subject to deposit of 20% of the demand, assessment orders have been passed in relation to year 2011-12, 2012-13 and 2013-14 and that demands in relation to these years are still pending. It is further the case of the respondents that in relation to year 2009-10 also, an amount of ₹ 34,44,765/ .....

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o amend the present petition by challenging the orders dated 11.9.2015 made by the fourth respondent under section 44 of the Act and such permission came to be granted 8. Mr. S. N. Soparkar, Senior Advocate, learned counsel with Mr. Dhaval Shah, learned advocate for the petitioner vehemently assailed the action of the respondents by submitting that very drastic action of attaching the bank accounts of the petitioner has been taken by the respondents which was not warranted in the facts and circu .....

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e court was invited to the notice dated 11.9.2015 issued by the fourth respondent, whereby the petitioner was called upon to pay the amount under the demand notice within a period of three days together with interest at 18%. It was submitted that despite such notice having been issued on 11.9.2015, on the same day, without waiting for the notice period to be over, all the three bank accounts of the petitioner came to be attached in exercise of powers under section 44 of the Act, once again in re .....

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er and on the other hand, the fourth respondent has proceeded to attach the bank accounts of the petitioner. It was urged that a person s right to carry on business is seriously affected by the conduct of the respondents in taking such coercive measures routinely as a normal thing. It was submitted that when the petitioner has preferred appeals together with the stay applications within the period of limitation for filing such appeals, there was no warrant for the respondents to resort to the dr .....

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y of the statutory period of three months and in particular when the petitioners had specifically informed that the stay application is fixed for hearing on a particular date. 8.2 Reliance was also placed upon an unreported decision dated 15.3.2004 of this court rendered in the case of Oil and Natural Gas Corporation v. State of Gujarat, Special Civil Application No.3107 of 2004, wherein the grievance voiced in the petition was that even though the period of limitation for preferring appeal to t .....

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n an unreported decision of this court in the assessee s own case rendered on 28.11.2014 in Special Civil Application No.12592 of 2014. 9. Opposing the petition, Ms. Maithili Mehta, learned Assistant Government Pleader reiterated the contentions of the affidavit-in-reply filed on behalf of the respondents No.3 and 4. It was submitted that the petitioner had been issued notice in Form 305 as contemplated under rule 27 of the Gujarat Value Added Tax Rules, 2006 (hereinafter referred to as the rule .....

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petitioner has no property situated in the State of Gujarat. It is in these circumstances, that with a view to secure the interest of the Government revenue, the orders under section 44 of the Act came to be passed. It was submitted that, therefore, the action of the fourth respondent being in consonance with the statutory provisions of section 44 of the Act, there is no warrant for interference by this court. 10. From the facts as emerging from the record, it appears that pursuant to the order .....

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l Tax Officer (3), Ahmedabad in the exercise of powers under section 44 of the Act, attached three bank accounts maintained by the petitioner with the Bank of India, Yavatmal Branch, Bank of India, Nagpur Branch as well as Bank of India, Naroda Branch, respectively. Each order under section 44 of the Act stated that the petitioner had not paid value added tax of ₹ 1,16,18,836/- with interest at 18% for the aforesaid period. Subsequently, the first appellate authority heard the stay applica .....

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ad been made in relation to year 2010-11. However, subsequently, demands have been raised in relation to years 2009-10, 2011-12, 2012-13 and 2013-14 in respect of which, powers have been exercised under section 44 of the Act and the above three bank accounts have again been attached. A perusal of the orders under section 44 of the Act dated 11.9.2015 issued to each of the above referred banks shows that each bank has been directed to send to the fourth respondent Pay Order/Demand Draft of ₹ .....

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ame day, has attached the above three bank accounts in relation to the demand notice pertaining to the above referred years. 12. It may be noted that in relation to each of the assessment years, the petitioner has filed appeals and the stay applications, all of which are pending before the first appellate authority for consideration. However, on the one hand, the first appellate authority is not taking any decision on the stay applications and on the other hand, the fourth respondent is proceedi .....

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e notice issued under section 27 of the Act. The fourth respondent is required to keep in mind the fact that the petitioner has preferred appeals before the first appellate authority and that the stay applications are pending. That if the stay applications are allowed or partly allowed, the petitioner would be required to deposit only a part of the demand covered under the notice or may be even granted complete unconditional stay. Under the circumstances, it is expected of the fourth respondent .....

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the petitioner. 14. As rightly submitted by the learned counsel for the petitioner, a man s right to carry on business is seriously affected when such coercive action of attaching of the bank accounts is taken by the respondents. Attachment of bank accounts seriously affects a person s reputation not only in the eye of the bank but also in the business community, thereby affecting the business itself. 15. At this juncture reference may be made to the decision of the Supreme Court in the case of .....

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f the requirement of rule of natural justice is to promote justice and prevent its miscarriage. Therefore, when the legislature confers power in the State Government to be exercised in certain circumstances or eventualities, it would be right to presume that the legislature intends that the said power be exercised in the manner envisaged by the statute. If the statute confers drastic powers it goes without saying that such powers must be exercised in a proper and fair manner. Drastic substantive .....

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ner. When the petitioner had already preferred an appeal with a stay application, the least that was expected of the fourth respondent was to wait for the outcome of the stay application before resorting to coercive measures as has been done in the present case. Besides, the orders under section 44 of the Act also suffer from the vice of non-application of mind, inasmuch as, in the notices issued to each of the banks, the fourth respondent has sought to recover the entire demand covered under th .....

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