31 March 2022 2:24 PM GMT
The Gujarat High Court bench of Justice J.B. Pardiwala and Justice Nisha M. Thakore has condemned the act of the department for attaching the personal immovable properties of the director even though the tax dues were settled under the Tax Resolution Scheme. The writ-petitioner/assessee, a company which is a taxable entity, has incurred liability towards the payment of tax under...
The Gujarat High Court bench of Justice J.B. Pardiwala and Justice Nisha M. Thakore has condemned the act of the department for attaching the personal immovable properties of the director even though the tax dues were settled under the Tax Resolution Scheme.
The writ-petitioner/assessee, a company which is a taxable entity, has incurred liability towards the payment of tax under the provisions of the GVAT Act. The company incurred a liability in the year 2013. The company preferred an application under the "Vera Samadhan Yojana, 2019". An application was filed on November 6th, 2019. In accordance with the scheme, the company was required to pay an amount, and upon deposit of the amount, the interest to the tune of Rs.60,53,560 was waived. The company deposited the amount under the scheme and discharged its total liability.
The respondent raised a fresh levy of Rs. 1,68,02,573 and attached the personal immovable properties of the director and his brother for the purpose of discharging the liability in the exercise of powers under Section 44 of the GVAT Act.
Section 44 of the GVAT Act provides the machinery for the VAT department to collect tax arrears from the debtors of the assessees (dealers). Counsel appearing for the writ-petitioner submitted that despite depositing the amount of Rs. 56,05, 146, the department has raised a demand of Rs. 1,68,02,573 and has also proceeded to attach the personal properties of the Director of the Company and the writ-the brother of the Director. Section 44 of the GVAT Act was misused by the authorities under the GVAT Act.
The counsel for the department relied on averments made in the affidavit-in-reply duly affirmed by the State Tax Officer in which it was stated that the petitioner availed the benefit of "Samadhan Yojna" in 4 firms. Hence, the petitioner was aware that, under the scheme, he had to pay the total tax amount and the waiver was of interest and penalty.
The court held that in interpreting a taxing statute, equitable considerations were entirely out of place. Moral and equitable considerations cannot be applied to bring a citizen who was not within the four corners of the taxing statute within its fold in order to make him liable to tax payment. The entire approach of the department was that, as it was not in a position to recover anything from the company, it could run after the director of the company and attach his personal properties.
"Over a period of time, we have noticed that Section 44 of the GVAT Act is being misused to the maximum. Either the authorities concerned have no idea about the scope and true purport of Section 44 of the GVAT Act, or they just pretend to be ignorant of the correct interpretation of Section 44 of the GVAT Act," the court said.
Case Title: Shri Shakti Cotton Pvt. Ltd. Versus Commercial Tax Officer
Citation: R/Special Civil Application No. 12788 of 2021
Counsel For Appellant: Advocate Hardik V.Vora
Counsel For Respondent: APG Utkarsh Sharma
Click Here To Read/Download Order