Threats to collect tax is illegal

The Delhi High Court last week told the Commissioner of Trade Tax to ensure its officers do not collect cheques from business premises on the ground of discrepancy in the levy and threatening to seal the establishment. The court passed the order because there have been such instances recently and the circular issued by the authorities in this context did not clearly bar such practice by the officers. In this case, Gullu's vs Commissioner, the Additional Value Added Tax officer visited the business premises and told the proprietor that the levy on the meat sold was higher than paid by her and unless Rs 12 lakh was paid by cheque on the spot, the premises would be sealed. The cheque was handed over under the threat. Later, she moved the commissioner alleging that what happened was illegal. The commissioner reviewed the computation and demanded Rs 28 lakh on the spot or else the establishment would be sealed. She then paid Rs 5 lakh. She moved the high court for return of the cheque and to prevent further coercive action. The cheque was then returned. The high court asked the authorities to issue fresh instructions to prevent recurrence of such incidents and make sure that "even where a dealer comes forward 'voluntarily' to deposit such cheque or cash towards tax dues at the time of such survey or inspection or sealing, the officers will decline to receive such cheque or cash and advise the dealer to make the payment only in the permitted modes."