The Allahabad high court has imposed a fine of Rs 2 lakh on the Uttar Pradesh commercial tax department for wrongly attaching a bank account of online shopping company Flipkart in a purported attempt at tax recovery.
The department had also withdrawn Rs 49.8 crore from the company’s account “without any authority of law”. The court, in its order, asked the department to refund the amount to the company with interest.
The high court bench, comprising Justice Tarun Agarwala and Justice VK Mishra, passed the order late last month while hearing a petition filed by Flipkart India Pvt Ltd against the assessment order of the commercial tax department and the attachment of its bank account.
“The court gets an uncanny feeling that a deliberate attempt was made by the respondents to withdraw money from the petitioner’s bank account through dubious means, by passing ex-parte assessment orders and not allowing it to be served validly on the petitioner,” the court said.
The court observed that if the department continued to function in such a manner, big companies would find it difficult to operate in the state.
According to the petition, the commercial tax department had not issued any summons to Flipkart with regard to non-payment of funds. Though the company had shifted its office from Noida to Ghaziabad in 2013, tax department officials kept affixing notices on its old office building despite knowing that the address had changed, it added.
The bench said that as the summons were not served to the petitioner, the seizure of its bank account was illegal. Hence, the commercial tax department should pay for its illegal act by refunding the tax recovery along with the interest amount, it added.