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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the notice issued under Section 26 of the Tamil Nadu General Sales Tax Act, 1959 was sufficient to fasten personal liability on the petitioner for payments made to the defaulting dealer, notwithstanding the absence of a fresh Form B-6 notice under Rule 18(8) of the Tamil Nadu General Sales Tax Rules, 1959.
Analysis: Section 26 of the Tamil Nadu General Sales Tax Act, 1959 provides a mode for recovery of arrears from persons holding money on account of a defaulting dealer. On receipt of notice, payment to the assessing authority discharges liability to the extent covered by the notice, and any payment made to the dealer after such notice attracts personal liability under Section 26(4). The earlier notice enclosed Form B-6 and the later communication specifically informed the petitioner that the dealer was in arrears of tax. The Court held that a fresh Form B-6 was not necessary once arrears had been intimated and the petitioner ought to have sought clarification before continuing payments to the dealer.
Conclusion: The notice was sufficient to attract liability under Section 26(4), and the petitioner was personally liable for the amount paid to the dealer after receipt of intimation of arrears.
Final Conclusion: The writ petition failed because the petitioner continued to pay the defaulting dealer after notice of arrears and could not avoid the statutory consequence under the recovery provision.
Ratio Decidendi: Once a creditor receives notice of a dealer's tax arrears under the statutory recovery mechanism, subsequent payments to the dealer without obtaining clarification can attract personal liability under the provision, and a further Form B-6 notice is not indispensable where arrears have already been intimated.
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