Akil Abdul Hamid Kureshi, J. - (1.) Heard learned counsel for the parties for final disposal of the petition. The petitioner has challenged series of orders produced as at annexure I collectively under which the Commercial Tax Officer has attached the properties of the petitioner on the ground that a huge tax demand of Rs. 3.80 crores is likely to arise against the petitioner for unpaid value added tax. Brief facts are as under: "1.1. The petitioner is a company registered under the Companies Act. The petitioner is engaged in trading of thermoplastic road marking material, commonly used for marking and creating strips on the road such as Zebra crossing and speed breakers. These markings are meant to last for a long time and are reflective in nature making them visible at night also. The petitioner has been declaring the product as falling under entry 42A of the Second Schedule to the Gujarat Value Added Tax Act, 2003 ("the VAT Act", for short), which entry pertains to "industrial inputs or agricultural inputs as may be specified by the State Government by notification in the Official Gazette". This entry carries tax liability of four per cent, plus one per cent, additional duty, i.e., total five per cent, of tax. The petitioner relies on Government Notification dated March 31, 2006 specifying various goods mentioned in the Schedule appended to the notification as "industrial input" for the purpose of entry 42A. Item 145 thereof is "rosin and resin acids and derivatives thereof; rosin spirit and rosin oils; run gums". This entry is under heading No. 38.06."
(2.) The petitioner has been filing tax returns accordingly, and we are informed that for the past two years such declarations were also accepted by the VAT authorities. However, the authorities are holding a prima facie belief that the product that the petitioner deals in does not fall under entry 145 of the said notification and correspondingly it cannot be classified as "industrial input" for the purpose of entry No. 42A inviting tax at the rate of five per cent, but that the same must fall under the residuary clause 87 of the Second Schedule inviting tax liability at the rate of 12.5 per cent. On such basis, a show -cause notice dated April 10, 2014 came to be issued by the Commercial Tax Officer calling upon the petitioner why for the year 2010 -2011 tax at the rate of 12.5 per cent, plus 2.5 per cent, not be calculated on the petitioner's sale of thermoplastic road marking material. The said authority further proposed to levy interest and impose penalties. In such show -cause notice, it was conveyed that the petitioner's stand that the thermoplastic road marking material is classified for the Central excise under entry 3806.90.90, and accordingly the same would fall under entry 145 for the purpose of VAT Act is not correct, since both entries are not identical. It was also conveyed that thermoplastic road marking material sold by the petitioner is classified under heading 3911.10 under the Central excise. The third objection of the authority was that the product is used as a marker once the road was constructed, and therefore, cannot be considered as an industrial input.
(3.) The assessment proceedings pursuant to such show -cause notice are going on. The petitioner opposes the proposals contained in the show -cause notice contending that the earlier declaration and the calculation of tax was correct. At that stage, the respondents issued impugned orders in exercise of powers under Sec. 45 of the VAT Act attaching various properties of the petitioner. By way of a sample, if we look at the first of such orders, it is one dated April 25, 2014 in which it is recorded that during the spot inspection of the petitioner's place of business between April 5, 2014 to April 7, 2014, various details were collected. It was found that the petitioner pays tax at the rate of five per cent, treating the product as an industrial input falling under entry 42A of the Second Schedule to the VAT Act, whereas such product is not specified elsewhere, and would, therefore, fall within the residuary clause 87 of the Second Schedule to the VAT Act, inviting tax at the rate of 12.5 per cent, plus 2.5 per cent. For the year 2010 -11, the tax would come to Rs. 3.80 crores. There would be further liability of interest. For such recoveries assessing authority has already issued notices to the petitioner. Therefore, for the possible tax liability, to protect the interest of the Revenue, it is necessary to place the properties of the petitioner under provisional attachment.;