In W.P.No.4485 of 2023-MAD HC- Unless assessment orders are passed in respect of all the assessment years, for which attachment order has been passed, Assistant Commissioner(CT) can’t exercise power u/s 45 of TNVAT Act to enforce sums alleged to be payable towards tax liability: Madras HC
Justice Abdul Quddhose [21-02-2023]

Read Order: KJK Poly Diamonds International P Ltd v. The Assistant Commissioner (CT) And Ors 

LE Correspondent

Chennai, March 14, 2023: The Madras High Court has quashed the impugned proceedings issued by the first respondent-Assistant Commissioner(CT) in a case where the petitioners alleged that even without passing an assessment order for the respective assessment years, the impugned proceedings had been issued by the Commissioner  by exercising power u/s 45 of TNVAT Act 2006.

The petitioner had approached the Bench of Justice Abdul Quddhose challenging the impugned Communication sent by the first respondent to the second respondent Bank, pertaining to the assessment years 2006-07 to 2016-17, under which the first respondent had directed the Bank to attach a sum of Rs 69,70,561, which according to the first respondent was a tax liability of the petitioner under CST and TNVAT Act 2006.

The first respondent had exercised its power under Section 45 of the Tamil Nadu Value Added Tax Act, 2006 by requesting the second respondent to withhold the aforesaid amount, available in the petitioner's Bank account and pay the same to the office of the first respondent by way of Demand Draft or Pay Order, favouring the first respondent.

The petitioner had challenged the impugned proceedings on the ground that even without passing an assessment order for the respective assessment years, the impugned proceedings had been issued by the first respondent, exercising its power under Section 45 of the TNVAT Act 2006, which according to the petitioner was arbitrary and illegal.

Referring to the assessment orders passed by the first respondent, the Bench opined that only for some of the assessment years, assessment orders were passed by the first respondent. However, the impugned proceedings wherein the first respondent had communicated the second respondent Bank to withhold the amount to the extent of Rs.69,70,561, available in the petitioner's account and pay the same to the office of the first respondent, pertaining to the assessment years 2006-07 to 2016-17, without passing the assessment orders with respect to some of the assessment years, the first respondent had attached the funds, belonging to the petitioner, which was lying with the Bank account, maintained with the second respondent Bank. 

“Unless and until the assessment orders are passed in respect of all the assessment years, for which the attachment order has been passed, which is the subject matter of challenge in this writ petition, the first respondent cannot exercise its power under Section 45 of the Tamil Nadu Value Added Tax Act, 2006 to enforce the sums alleged to be due and payable by the petitioner towards tax liability”, the Bench said.

If at all, the first respondent can take coercive steps against the petitioner under Section 45 of the TNVAT Act only in respect of the assessment years, where the assessment orders are passed, the Bench noted while also adding that being a single proceeding covering all the assessment years right from 2006-07 to 2016-17, the proceeding had to be declared as invalid as in respect of some of the assessment years, mentioned in the impugned proceeding as no assessment orders were passed by the first respondent prior to the issuance of the impugned proceedings.

Considering the petitioner’s contention that in respect of all the assessment years, for which the impugned proceedings had been passed, the respondents had not passed any assessment order, the Bench stated, “Necessarily for the aforementioned reasons, the impugned proceedings dated 30.01.2023 passed by the first respondent has to be quashed and the writ petition will have to be allowed.”

Thus, allowing the Writ Petition, the Bench quashed the impugned proceedings issued by the first respondent.