Shaw Wallace and Co. Ltd. vs Commercial Tax Officer, Market Street Circle, Secunderabad and Another

Syed Shah Mohammed Quadri, J.—Section 17-B of the A.P. General Sales Tax Act, 1957, provides thus :

"Provisional attachment of property to protect revenue in certain cases. -

(1) Where, during the pendency of any proceeding for the assessment of any turnover or for the assessment or reassessment of any turnover which has escaped assessment, the assessing authority is of the opinion that for the purpose of protecting the interest of the revenue it is necessary do to do, he may with the previous approval of the Commissioner, by order in writing, attach provisionally in the prescribed manner any property belonging to the assessee.

(2) Every such provisional attachment shall cease to have effect after the expiry of a period of six months from the date of the order made under sub-section (1) :

Provided that the Commissioner may, for reasons to be recorded in writing, extend, the aforesaid by such further period or period as he thinks fit, so, however, that the total period of extension shall not in any case exceed two years."

A plain reading of the above extracted provision, makes it clear that it empowers the assessing authority to make provisional attachment of the property to protect the Revenue in certain cases. The classes of cases in which this power can be invoked are indicated in the main body of the section and they are : (i) pendency of any proceedings for the assessment of turnover; or (ii) for the assessment or reassessment of turnover which has escaped assessment. This power can be invoked in a case where the assessing authority is of the opinion that for the purpose of protecting the interest of the Revenue it is necessary so to do. Such an order of attachment has to be passed only with the previous approval of the Commissioner which has to be accorded in writing. It is only when these requirements are complies with that any provisional attachment of the property of the assessee can be made. This is only a temporary measure, as is clear from the language of sub-section (2) of the said section for the provisional attachment lapses after the expiry of six months from the date of the order, unless of course, the commissioner extends the said period for any specific reasons which should be recorded by him at the time of granting the extension. Even this power of extension is subject to an upper limit of two years. Thus it is clear that it is an extraordinary power intended to be exercised where the proceedings for assessment or turnover or reassessment of escaped turnover, are pending. In a case where the assessment proceedings have been completed and the assessee has filed an appeal against the order of assessment and the appellate authority has granted conditional stay for recovery of the tax assessed, the power u/s 17-B cannot be invoked. Such an exercise of power will be wholly contrary to the law and violative of section 17-B.

In the instant case the sales tax was assessed for the assessment years 1991-92 and 1992-93 by the Sales Tax Officer. The petitioner filed appeal against the said order before the Sales Tax Appellate on September 22, 1993. While so, the petitioner approached the Additional Commissioner and Joint Commissioner (C.T.), legal, on September 23, 1993 and sought stay of collection of arrears of Rs. 22,45,364 and Rs. 40,37,010 for the assessment years 1991-92 and 1992-93 respectively. By order dates October 4, 1993 the said authority granted stay of the tax on condition of the petitioner furnishing bank guarantee for 50 per cent. of the disputed tax assessed pending disposal of the appeal before the Tribunal. In compliance with the said orders the petitioner it is stated, has furnished bank guarantee on November 11, 1993. However, the Commercial Tax Officer, the first respondent herein, has issued the impugned order of attachment.

Sri Srinivasa Reddy, the learned counsel for the petitioner, contends that the impugned order is wholly arbitrary and unsustainable. Learned Government Pleader however made an attempt to sustain the order in the ground that it is in the interest of the Revenue the impugned order of attachment is made as the proceedings are still pending before the appellate authority.

The short question that falls for our consideration is whether the impugned order of attachment u/s 17-B of the Act is sustainable in law. We have already stated the requirements of section 17-B above. Keeping those requirements in mind we have no hesitation in holding that the impugned order cannot be sustained both on facts as well as on the principle of law thus stated. If, as submitted by the learned Government Pleader, the purpose of attachment is no ensure that there should be enough security for the recovery of the tax, that has been secured, though to some extent only, by the order of the Additional Commissioner and Joint Commissioner requiring the petitioner to give bank guarantee for half of the amount in question. Therefore there is no need again to issue the impugned order. Be that as it may, even if all other requirements of section 17-B are satisfied, in view the impugned notice cannot be sustained while the conditional order of stay granted by the competent authority is in force and the petitioner has complied with the conditions of that order.

For the above reason we hold that impugned order is illegal, and quash the same. The writ petition is accordingly allowed. No costs.

Writ petition allowed.