In Civil Appeal No. 760 OF 2023-SC- Reviving the attachment notice and allowing the revenue to recover the dues owed, Top Court sets aside Telangana High Court order
Justices S Ravindra Bhat & Dipankar Datta [15-03-2023]

Read Order: The Commercial Tax Officer & Ors v. Neeraja Pipes Pvt. Ltd

Chahat Varma

New Delhi, April 15, 2023: The Supreme Court has set aside an order of the Telangana High Court which had allowed the writ petition filed by the assessee urging therein that without effecting the service of the assessment orders, as mandated by law, the revenue could not claim tax shown as arrears, and could not resort to provisions of the Revenue Recovery Act, 1864, attaching its properties.

In the said case, the assessee had complained that the revenue did not provide copies of assessment order for the years 2005-06, 2008-09, 2009-10, and 2010- 11 under the Andhra Pradesh General Sales Tax Act, 1957 and Telangana State Value Added Tax Act, 2005 and did not lift attachment order dated 03.02.2012 and another, revised attachment order dated 20.02.2018 under Form V invoking the provisions of Revenue Recovery Act, 1864, under Section 27 of the VAT Act.

The revenue argued that the arrears shown as due, were not paid by the assessee, which had resulted in a demand notice and since there was no response, or compliance, an attachment order dated 03.02.2012 in Form V under the RR Act was issued.

The revenue further contended that it became aware of a notification issued by the assessees banker, Canara Bank, bringing its immovable properties for sale in public auction to recover the loans extended to it. Consequently, revenue had approached the High Court by filing a writ petition (W.P. No. 25943/2011) to declare the notification issued by the bank, as illegal and contrary to the provisions of the VAT Act. In the said proceeding, the assessee was arrayed as second respondent.

A division bench of Justice S. Ravindra Bhat and Justice Dipankar Datta held that “stating that findings of the High Court, on the facts would not normally have required a second look by this court; however, the peculiar circumstances of this case compel scrutiny.”

“When the revenue had filed a writ petition complaining about Canara Banks proposal to auction the assessees properties, it had impleaded the assessee too. In the pleadings, there was a specific mention about the assessment orders, them having become final, and why those demands had to be given primacy as revenue dues, over and above the banks dues. The assessee was served in those writ proceedings; however, it did not dispute the revenues contention. This, in the opinion of the court is a telling aspect, as it highlights the assessees conduct in deliberately choosing to keep quiet, even when it could have raised a grievance.”, observed the division bench.

The division bench held that “the High Court, with due respect, fell into error, in holding that since the subject matter of the revenues writ petition (W.P. No. 25943/2011) was different, the assessee could not be faulted for highlighting that it had not received a copy of the assessment order.”