Padmavathi Commercial Corporation vs Commercial Tax Officer

Syed Shah Mohammed Quadri, J.—The petitioner challenges the validity of the notice dated 9-2-1995 issued by the respondent u/s 17-B of the Andhra Pradesh General Sales Tax Act, 1957 (for short'' the Act'')addressed to one of the customers of the petitioner i.e., M/s. Santosh Refineries Private Limited, Hyderabad by praying for issue of a Writ of Mandamus declaring the said notice as illegal and arbitrary and further to declare the notice of attachment has lapsed on expiry of six months from the date of the notice.

The petitioner is a registered dealer on the rolls of the respondent It is engaged in the business of vegetable oils. The petitioner purchases sunflower oil locally from registered dealers and sells the same within the State and claims exemption on the second sales as the sunflower oil is liable to be taxed at the rate of 4% at the point of the first sale in the State. On 9-2-1995 the respondent issued notice u/s 17-B of the Act to M /s. Santosh Refineries Private Limited, Hyderabad, the customer of the petitioner to withhold the payments to the petitioner. It is the legality of that notice that is assailed in this Writ Petition.

In the counter-affidavit filed by the respondent, it is stated, inter alia, that the petitioner filed monthly turnover returns in Form A-2 disclosing the 40 turnovers for the months from July, 1994 to December, 1994 as nil and claimed exemption in the A-2 returns filed for the months of January and February, 1995 on the total turnover of Rs. 132/63,854/- for the said two months. It appears that in the A-2 return filed for the months of March, 1995 to July, 1995 the turnover is shown as nil and thereafter, on 28-7-1995 the petitioner filed an application informing the closure of his business with effect from 1-7-1995. The assessment of the petitioner for the year 1994-95 is pending finalisation and it is expected that huge amount would become payable by the petitioner as sales tax. To safeguard the interests of the revenue of the State, having come to know that the petitioner has to get a sum of Rs. 3,57,699/- as sale consideration for the sale of goods already made to M/s. Santosh Refineries Private Limited, Hyderabad, notice u/s 17-B of the Act was issued attaching the moneys payable to the petitioner by M/s. Santosh Refineries Private Limited. In the circumstances, it is prayed that the Writ Petition may be dismissed.

The short question that arises for consideration is whether the impugned notice issued u/s 17-B of the Act is valid under law. It would be useful to extract Section 17-B of the Act here:

"17-B. 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 re-assessment 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 so 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 period by such further period or periods 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 provision makes it clear that it is only when during the pendency of any proceeding for the assessment of any turnover or for the assessment or re-assessment 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 to attach the properties of the petitioners, the assessing authority may with the previous approval of the Commissioner, by order in writing, attach provisionally in the prescribed manner any property belonging to the assessee. Such an order should be in writing and has to be made with the previous approval of the Commissioner. From the counter-affidavit, we do not find that any turnover of the petitioner has escaped assessment or that the impugned attachment was made with the previous approval of the Commissioner. However, we notice that the respondent has sought permission of the Commissioner on 8-2-1995 in Ref. No. Al(2)/260/95. But it is not mentioned as to when the Commissioner has accorded permission. The averments in the counter affidavit are silent on this aspect

With regard to the contention of the petitioner that the order of attachment has lapsed on the expiry of six months from the date of the notice, it would be relevant to notice the provisions of sub-section (2) of Section 17-B, extracted, above. Sub-section (2) directs that the provisional attachment issued under sub- section (1) of Section 17-B shall cease to have effect after the expiry of a period of six months from the date of the order. The proviso to that sub-section, however, authorises the Commissioner to extend the period of attachment for the total period not exceeding two years. Though the counter-affidavit records that the Commissioner has extended the period of attachment upto 31-3-1996, no reasons whatsoever are mentioned therein nor a copy of the order of the Commissioner is enclosed to the counter-affidavit to examine the reasons for extension of the time. Be that as it may, as the order of attachment is held to be illegal, the same cannot be sustained. We hasten to add that this order will not preclude the respondent from passing a fresh order of attachment u/s 17-B of the Act if all the requirements of that Section are duly complied with.

Subject to the above observation, the Writ Petition is allowed. There shall be no order as to costs.