Sales tax recovery without statutory liability is invalid, and coerced collections from the wrong person must be refunded.

Sales tax dues could not be enforced against a person unless liability was fixed on that person by law. The tribunal found that the petitioner was not shown to be a transferee liable for the defaulting company's past dues, no statutory provision or notification fastened that liability, and the relevant demand notice and assessment order were not served on the petitioner. The certificate proceeding was therefore not legally maintainable and the order refusing to drop it was set aside. As the petitioner's bank account was attached to recover sums without lawful authority, the amount collected was refundable, though the respondents remained free to proceed against the proper debtor in accordance with law.

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Issues: (i) whether the certificate proceeding initiated against the petitioner for recovery of sales tax dues allegedly payable by another company was legally maintainable; (ii) whether the amount recovered from the petitioner was liable to be refunded.

Issue (i): whether the certificate proceeding initiated against the petitioner for recovery of sales tax dues allegedly payable by another company was legally maintainable

Analysis: The petitioner was not shown to be a transferee liable for the dues of the defaulting company within the meaning of the relevant sales tax law. The materials relied upon did not show any statutory provision or notification fastening the dues of the other company upon the petitioner. The takeover notifications showed transfer of the undertaking to the State Government and later arrangements for the petitioner to take over assets and business, but not a lawful transfer of past tax liability to the petitioner. The record also showed no service of the relevant demand notice or assessment order on the petitioner. A private assurance given under pressure could not create legal liability where none existed in law.

Conclusion: The certificate proceeding against the petitioner was not legally maintainable and the impugned order refusing to drop the proceeding was liable to be set aside, in favour of the petitioner.

Issue (ii): whether the amount recovered from the petitioner was liable to be refunded

Analysis: The recovery was effected by attaching the petitioner's bank account to realise dues not lawfully recoverable from the petitioner. Since the coercive collection was without legal authority, the amount obtained could not be retained by the respondents. The respondents were, however, left free to proceed in accordance with law against the appropriate person for recovery of the dues.

Conclusion: The amount recovered from the petitioner was refundable, in favour of the petitioner.

Final Conclusion: The proceeding was quashed, the impugned order was set aside, and the respondents were directed to refund the recovered amount while preserving their right to take lawful steps against the proper debtor.

Ratio Decidendi: Tax dues cannot be recovered from a person unless liability is fixed on that person by law; coercive recovery without statutory basis is unauthorised and the amount so collected is refundable.

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