Wipro Case: HC Asks State Tax Officials To Refrain From Coercive Recovery When Appeal Is Pending

| Updated: April 7, 2022 10:59 am

The Highcourt has criticised the coercive methods used by the state tax officials and said that the recovery targets for revenue collection should not be at the expense of foreclosing the remedies which are available to assessees for challenging the correctness of a demand.

The bench of Justice J B Pardiwala and Justice Nisha Thakore was hearing the case brought by Wipro Ltd which is assessed for VAT liabilities for different years in the state. The tax officials had issued notices to the company’s bankers like SBI and HSBC for attachment of the company’s accounts and directed the ban to transfer Rs.49.8 crores from the company’s account to the state treasury. Wipro pleaded that they are still in the process of exercising their legal right to challenge the assessment orders before appellate authorities and concerned tribunals.

The High court bench quashed the notices issued by the tax department agreeing with Wipro that the tax authorities did not properly follow the Gujarat Value Added Tax Act while issuing the notices. They contended that the notices did not contain the calculation by which the amount of Rs.49.8 crores was arrived at. The High Court also directed to complete the appeals filed by the company against the assessment within two months.

The high court department significantly observed that “The tax department is expected to at least wait for the final outcome of the appeals on their own merits more particularly when the appeals are already admitted”.

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