Natural justice limits sales tax recovery: liability must be ascertained and heard before coercive proceedings begin.

Recovery of sales tax arrears under section 33(4) of the Madhya Pradesh General Sales Tax Act, 1958 requires the taxing authority to first establish the factual basis for fastening liability on a partner, member of a firm, association, or joint Hindu family after discontinuance of business. The authority acts quasi-judicially and must consider jurisdictional objections and give a fair hearing before issuing coercive recovery process. Where the person concerned disputes both membership and any assumed liability, summary rejection of objections without enquiry breaches natural justice. The recovery certificate and consequential orders were therefore liable to be quashed, though fresh action was left open on properly ascertained facts after hearing the person concerned.

---

---

Issues: Whether recovery proceedings for sales tax arrears could be sustained against the petitioner without first determining his liability on properly ascertained facts and giving him an opportunity of being heard.

Analysis: Section 33(4) of the Madhya Pradesh General Sales Tax Act, 1958 enables recovery of arrears from partners or members of a firm, association, or joint Hindu family after discontinuance of business, but the provision can operate only when the factual basis for fastening liability is established. The taxing authorities act quasi-judicially and are bound to consider objections to their own jurisdiction. Here, the petitioner disputed the very facts on which liability was sought to be imposed, including his membership of the family and any assumed undertaking to pay the tax. No enquiry was held before issuance of the revenue recovery certificate, and the objection was summarily rejected without affording him a fair opportunity to prove non-liability.

Conclusion: The recovery proceedings were vitiated for breach of natural justice and could not be sustained. The petitioner was entitled to have the certificate and consequential orders quashed, while leaving it open to the taxing authorities to proceed afresh under section 33(4) on properly ascertained facts after hearing him.

Final Conclusion: The writ petition succeeded because coercive recovery was initiated without prior adjudication of the petitioner's liability and without observance of fair procedure.

Ratio Decidendi: A taxing authority exercising quasi-judicial powers cannot recover arrears from a person disputed to be liable unless the foundational facts are first determined after giving that person an opportunity of being heard.

---