TaxTMI 
TaxTMI 
2011 (7) TMI 1078
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.... self acquired property which includes a residential house situated at Plot No. 147/47, Bhagwandin Nagar, Indore. The petitioner has further stated that he is a regular assessee of the income-tax Department and has enclosed copies of the income-tax returns for the years 2001 to 2004. He has also stated that he is owner of a Maruti car which also does not belong to M/s. Mahesh Niranjan Jute Pvt. Ltd. The petitioner has further stated that the company in question was a registered dealer with the Sales Tax Department for the period with effect from April 1, 1998 to March 31, 1999 and the company has been assessed as a dealer by the Sales Tax Department. An assessment order was passed under section 28(1) of the M. P. Commercial Tax Act by the Assistant Commissioner of Commercial Tax, Indore, Division No. 3 and vide order dated August 30, 2002, a demand of Rs. 44,19,450 was raised. The petitioner has further stated that the company in question being a distinct legal and juristic entity, has challenged the aforesaid demand and now the matter is pending before this court in W. P. No. 547 of 2005 (Mahesh Niranjan v. State of M. P.). The contention of the petitioner is that the Sales Tax De....
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....ndran v. State of Kerala [1984] 55 STC 209 (Ker). (2) Tikam Chand Jain v. State Government of Haryana [1987] 67 STC 388 (P and H). (3) Punalur Paper Mills Ltd. v. District Collector, Quilon [1985] 60 STC 193 (Ker). (4) Western India Gunnies Private Limited v. Commercial Tax Officer (FAC) and Ramnarayan Shahu v. Commercial Tax Officer (FAC) [1990] 78 STC 97 (AP). (5) G. C. Mehrotra v. Deputy Collector (Collections), Sales Tax [1998] 110 STC 406 (All). (6) Nishad Patel v. State of Kerala [1999] 113 STC 395 (Ker). (7) Maddi Swarna v. Commercial Tax Officer [2001] 124 STC 203 (AP). (8) Peter J. R. Prabhu v. Assistant Commissioner of Commercial Taxes [2001] 124 STC 238 (Karn). The petitioner has prayed for quashing of orders dated May 2, 2008 and May 29, 2005 relating to auction of the petitioner's property as well as sale proclamation issued by the respondents. A reply has been filed oh behalf of the respondents and the stand of the respondents is that they have initiated action by invoking provisions of the M. P. Land Revenue Code, 1959, as the petitioner is the director of a private limited company. The respondents have placed reliance upon section 5 of the Companies Act....
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....ings under the M. P. Commercial Tax Act read with M. P. Land Revenue Code against the petitioner who is also the director of the company and the residential house of the petitioner as well as the personal car of the petitioner was put to an auction by issuing a proclamation of sale on August 2, 2005. It is pertinent to note that the order of the assessment is subject-matter of W. P. No. 547 of 2005 (Mahesh Niranjan v. State of M. P.) filed by the company and the same is pending adjudication before this court. It is also an admitted fact that the property in question is the personal property of the petitioner and it is not the property of the company in question. Section 2(h) of the M. P. Commercial Tax Act, 1994 defines a "dealer" as under:- "(h) 'dealer' means any person who carries on the business of buying, selling, supplying or distributing goods directly or otherwise, whether for cash, or for deferred payment or for commission, remuneration or other valuable consideration and includes,- (i) a local authority, a company, an undivided Hindu family or any society (including a co-operative society), club, firm or association which carries on such business; (ii) a societ....
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....her sum payable under this Act, in such form and in such manner as may be prescribed. (2) Where a company registered under section 22 or section 23 and liable to pay tax under the Act ordinarily at the rate of rupees twelve thousand per quarter or rupees forty eight thousand per annum or above, fails to furnish returns under section 26 in time or fails to pay the tax payable according to such returns or fails to furnish any return or fails to pay tax payable under the Act, the Commissioner may require to furnish personal/corporate guarantee of the promoters of such company for proper realisation of tax or arty other sum payable under this Act, in such form and in such manner as may be prescribed. Explanation:- For the purpose of this section:- (1) the expression 'promoters' means:- (i) who subscribes to the memorandum of article of association, or (ii) who holds 20 per cent or more of the share capital directly or indirectly/or in the name of his/her relatives, and (2) in the case of a corporate body is a subsidiary or holding company of that body and holds 20 per cent or more of the share capital. (3) the expression 'relatives' shall have the same meaning as....
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.... to the character of such enactment to add to the said rights and liabilities by referring to other laws (vide Rao Bahadur Ravulu Subba Rao v. Commissioner of Income-tax, Madras [1956] 30 ITR 163 (SC) ; AIR 1956 SC 604). Unless provisions of other laws are expressly or by necessary implication incorporated in a codifying and amending Act such provisions have no relevance to decide questions directly falling under the codifying statute. State of Punjab v. Jullundur Vegetables Syndicate [1966] 17 STC 326 (SC) ; AIR 1966 SC 1295 supports this view. It therefore follows that in the absence of a specific provision in the Sales Tax Act fastening liability on the director or the managing director of a company for the tax due by the company, I am of the view, that no proceedings can be initiated against the director or the managing director for recovery of the said dues." In the case of Peter J. R. Prabhu v. Assistant Commissioner of Commercial Taxes, Kumta (Uttara Kannada District), Karnataka reported in [2001] 124 STC 238 (Karn), the Karnataka High Court has again held that arrears of tax cannot be recovered personally from the director and any reference to personal liability of the dir....
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....s an independent juristic entity. It has its own independent legal existence. It can be sued in its name and it can sue in its own name. The liability of a company cannot become liability of the directors and/or shareholders. On this point, I need not deliberate further as this issue has been comprehensively settled by a series of judgment of this court starting from Harihar Prasad v. Bansi Missir [1932] 2 Comp Cas 32 (Pat) ; AIR 1931 Patna 321 to one of the last judgments on this issue being the Division Bench judgment of this court in the case of Kanhalya Lal v. State of Bihar reported in [2002] 2 PLJR 553. In the said case, the earlier judgment in respect of the sales tax dues and its recovery from director has also been noticed in the case of Damodar Prasad Nathani v. State of Bihar since reported in [1999] 1 PLJR 522. In that view of the matter, I have no hesitation and/or reservation in cancelling all proceedings as against the two petitioners in both the cases. The two petitioners cannot be proceeded against in any manner in the aforesaid certificate proceedings save and except that they would be the authorised representative to represent the company but beyond that they are....
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....al mind to be. On the other hand, if the Crown seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of law the case might otherwise appear to be. In other words, if there be admissible in any statute what is called an equitable construction, certainly, such a construction is not admissible in a taxing statute where you can simply adhere to the words of the statute', (see : Partington v. A. G. [1869] LR 4 HL 100). Viscount Simon quoted with approval a passage from Rowlatt, J., expressing the principle in the following words : 'In a taxing Act one has to look merely at what is clearly said.' There is no room for an intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in nothing is to be implied. One can only look, fairly at the language used. (see : Cape Brandy Syndicate v. IRC [1921] 1 KB 64). Relying upon this passage Lord Upjohn said : 'Fiscal measures are not built upon any theory of taxation'. The above passage stating the principle of strict construction of taxing was quoted (from sixth edition of this book) with approval i....
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.... stated by Lord Simon : 'It may seem hard that a cunningly advised taxpayer should be able to avoid what appears to be his equitable share of the general fiscal burden and throw it on the shoulders of his fellow citizens. But for the courts to try to stretch the law to meet hard cases (whether the hardship appears to bear on the individual taxpayer or on the general body of taxpayers as represented by the Inland Revenue) is not merely to make bad law but to run the risk of subverting the rule of law itself (see : Ransom (Inspector of Taxes) v. Higgs [1974] 3 All ER 949 (HL)). The same rule applies even if the object of the enactment is to frustrate legitimate tax avoidance devices for moral precepts are not applicable to the interpretation of Revenue statutes'. It may thus be taken as maxim of tax law, which although not to be overstressed ought not to be forgotten that, 'the subject is not to be taxed unless the words of the taxing statute unambiguously impose the tax on him.' (see : Russel v. Scott [1948] 2 All ER 1). The proper course in construing revenue Acts is to give a fair and reasonable construction to their language without leaning to one side or the oth....