Ritesh Oil Industries vs Commercial Tax Officer and Others

S. Parvatha Rao, J.—The petitioner seeks a writ of certiorari or any other appropriate writ, etc., to declare the action of the respondents in seeking to recover the tax which is not levied as illegal, arbitrary and high handed, and consequently to quash the form I distraint notice dated October 7, 1995 and form II distraint order attaching goods worth of Rs. 1,68,000 issued by the 1st and 2nd respondents respectively and also to quash the attachment order dated October 5, 1995, issued by the 1st respondent to the petitioner''s bank and the instructions said to have been issued by the 3rd respondent to M/s. Kedia Vanaspathi Limited to stop payment of Rs. 3,22,251 to the petitioner pursuant to its bill dated September 19, 1995.

When this writ petition came up for admission on October 10, 1995, the learned Government Pleader for Commercial Taxes placed before us the relevant file for showing that the impugned attachments were made in exercise of the powers u/s 17-B of the Andhra Pradesh General Sales Tax Act, 1957 (for short, "the Act"), after obtaining the previous approval of the Commissioner of Commercial Taxes. The learned Government Pleader sought time for filing a counter-affidavit stating all the facts leading to the said attachments. Subsequently counter-affidavit of the 1st respondent, that is, the Commercial Tax Officer, Jeedimetla, Hyderabad, dated October 12, 1995 is filed. The learned counsel for the petitioner took time for filing reply and we have granted him time; but today he submits that as the matter turns on the interpretation of section 17-B of the Act and on whether the authorities concerned followed the requirements of the said provision on admitted facts, no reply affidavit would be necessary for the disposal of the present writ petition. In the circumstances, we heard both sides for the final disposal of the writ petition itself.

It is not necessary to enter into the details of the facts because we find that the requirements of section 17-B of the Act have not been complied with in the present case. Section 17-B of the Act is as follows :

"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 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 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."

We find the language plain and unambiguous. The first requirement under this provision is that the assessing authority should form an opinion during the pendency of any proceeding for the assessment of any turnover or for the assessment or reassessment of any turnover which escaped assessment. In the present case, it is stated that proceedings are pending in respect of assessment year 1994-95. The second requirement is that the opinion to be formed by the assessing authority should be that for the purpose of protecting the interest of the revenue it would be necessary to attach provisionally any property belonging to the assessee in the manner provided. The third requirement is that before proceeding to make the provisional attachment, and after forming the said opinion, the assessing authority should obtain the previous approval of the Commissioner of Commercial Taxes and that approval should be by order in writing. From a reading of sub-section (1) of section 17-B, it is transparently clear that the opinion that has to be formed should be by the assessing authority and upon his forming the required opinion he will have to obtain the previous approval of the Commissioner and the Commissioner should give his approval to him, i.e., the assessing authority.

From the facts narrated in the counter-affidavit it is obvious that these requirements are not satisfied in the present case. As already stated earlier, the learned Government Pleader for Commercial Taxes produced before us the relevant record on October 10, 1995 and we directed him to file the necessary papers after service on the other side. From the papers filed it is seen that in the present case it was the Deputy Commissioner (Commercial Taxes), Hyderabad, (Rural) Division, who addressed the Commissioner by letter dated September 30, 1995, for approval for provisional attachments and by letter dated October 5, 1995, addressed to the Deputy Commissioner the Commissioner gave his approval to him. That approval was forwarded by the Deputy Commissioner to the 1st respondent and the 3rd respondent on October 6, 1995, with instructions to make the provisional attachments, pursuant to which the provisional attachments impugned in the present writ petition were made by the 1st and 3rd respondents. It is obvious therefore, and the learned Government Pleader could not but accept, that the assessing authority, that is, the 1st respondent herein, had not formed any opinion of his own as required u/s 17-B of the Act and he had not moved the Commissioner for the requisite previous approval for making the impugned attachments. The learned counsel for the petitioner also points out that on September 30, 1995, itself - i.e., even before the Commissioner''s approval - the 3rd respondent issued instructions to the buyer of the petitioner, that is, Kedia Vanaspathy Limited, not to pay a sum of Rs. 3,22,251 that had become payable to the petitioner for the goods sold by the petitioner to the buyer. In view of this, we are satisfied that the impugned attachments are not in accordance with and are in flagrant violation of section 17-B of the Act and are therefore bad and have to be set aside.

The learned counsel for the petitioner submits that the petitioner would be willing to furnish a bank guarantee for Rs. 5,00,000 which would cover the value of the attachments in question. We appreciate this.

In the circumstances, we direct the respondents to raise all the attachments questioned in this writ petition forthwith on the petitioner furnishing a bank guarantee for a sum of Rs. 5,00,000 within fifteen days from today, valid till the finalisation of the assessments and raising of the demands thereon.

The writ petition is accordingly allowed. No costs.

Writ petition allowed.