K DIGAMBER Vs. COMMERCIAL TAX OFFICER

JUDGEMENT

(1.) HEARD both the counsel at the stage of admission.

(2.) THE petitioner, who is a registered dealer doing business in jaggery, etc. , questions the action of the first respondent in issuing notices dated June 30, 1999 and July 17, 1999 to the second respondent-bank to stop the transactions in the account held by the petitioner and to hold up the money of M/s. Goutham Traders of which the petitioner is the proprietor till the final assessment proceedings are issued.

(3.) COMING to the second notice dated July 26, 1999, there is a little bit of improvement. By that time, the proceedings for assessment were initiated, though not finalised. He informed the second respondent-bank that notice was issued in exercise of power under section 17 of the Andhra Pradesh General Sales Tax Act. He requested the second respondent to hold up the money lying to the credit of M/s. Goutham Traders till final orders are communicated to the bank. Even this notice is beyond the scope of powers conferred on the first respondent. Section 17 which authorises the assessing authority to issue a notice in the nature of a garnishee notice contemplates that certain amount is due by the dealer "in respect of arrears of tax, penalty or fee". Undisputedly and indisputably, the assessment has not been finalised and no demand has been raised. After the demand is raised, the petitioner will normally have twenty-one days time for making payment and moreover he will have remedy of appeal. The resort to section 17 in anticipation of an assessment visiting the petitioner with tax liability is not contemplated by section 17 and such a notice is clearly in excess of the jurisdiction vested in the first respondent. If at all, the amount lying in the bank can only be attached by resorting to section 17-B. But, for doing that, the prior approval of the Commissioner is required. AS seen from the communication dated July 26, 1999 the power has not been exercised under section 17-B, with the permission of the Commissioner. The impugned notices cannot therefore be sustained in law and they are examples of arbitrary and unreasonable exercise of power. In fact, a division Bench of this Court in D. Pitchaiah v. Assistant Commercial Tax Officer, Rajahmundry [1987] 66 STC 283 as long back as in 1987 held that the assessing authority in order to recover the tax to be levied has no jurisdiction to restrain a third party from making the payments to the dealer, before making an assessment-provisional or final. The impugned notices are, therefore, quashed and the writ petition is allowed.