TaxTMI 
TaxTMI 
2019 (7) TMI 319
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....hout Jurisdiction, arbitrary, illegal, null and void; (B) YOUR LORDSHIPS may be pleased to stay order dated 23.1.2018 and order dated 14.5.2018 pending the admission, hearing and final disposal of this petition and further be pleased to direct the respondents to remove the attachment of the property situated at Survey No.783, Block No.480 Mouje Tranaj, Taluka: Matari, District: Kheda; (C ) YOUR LORDSHIPS be pleased to grant such other and further relief as may be deemed fit by this Hon'ble Court, in the interest of justice." 2. The case of the writ applicant, in its own words, as pleaded in the writ application, is as under: 2. The petitioner, by way of the present petition begs to challenge the order dated 23.1.2018 passed by respondent no.1 under 46, 47 and 48 of The Gujarat Value Added Tax (hereinafter referred to as "The Act") and consequent order dated 14.5.2018 passed by respondent no. 2 attaching the property of the petitioner situated at Survey No.783, Block No.480 Mouje Tranaj, Taluka: Matar, District: Kheda. The petitioner begs to Annex copies of the impugned orders dated 23.1.2018 and 14.5.2018 at Annexure-A colly. 3. The petiti....
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.... AGP made a statement that the attachment which was subject matter of the petition had lapsed and therefore vide order dated 9.6.2016 this Hon'ble Court was pleased to dispose of the said petition on the ground that the attachment of the immovable property which was subject matter of the petition lapsed upon completion of period of one year from date of issue of the order dated 24.2.2014. This Hon'ble Court had further recorded that the authority shall act on lapsing of the order of attachment. Annexed hereto and marked as Annexure-G is a copy of the order dated 9.6.2016. 4.6 The petitioner states that however, again vide order dated 23.1.2018, the respondent no.1 passed an order under section 46, 47 and 48 of the Act attaching the property of the petitioner for the dues of respondent no.3 company. The petitioner states that by the impugned order passed against respondent no.3, respondent no.1 has attached the property of the petitioner without giving any opportunity of hearing to the petitioner. The petitioner has already annexed a copy of the impugned order at Annexure-A. 4.7 The petitioner states that in the impugned order, against the property of the p....
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.... exercise of his powers under the provisions of the Gujarat Land Revenue Code mutating the Revenue Entry No.3151 in the revenue records with respect to the property in question. The order passed by the Mamlatdar creates a charge of the State Government over the property in question. 4. Being dissatisfied with such action on the part of the respondent No.1, the writ applicant has come up with this writ application with a prayer that the order of attachment could not have been passed as the land is of the ownership of the writ applicant and the writ applicant is not a defaulter under the provisions of the Act, 2003. 5. Mrs. Pahwa, the learned counsel appearing for the writ applicant vehemently submitted that the order passed by the respondent No.1 as well as the order passed by the respondent No.2 is erroneous being contrary contrary to the provisions of the Act, 2003. Mrs. Pahwa submitted that the impugned order of attachment has been passed by the respondent No.1 in exercise of powers under Section 46 of the Act, 2003. Section 46 is with respect to the special powers of the tax authorities for recovery of tax as arrears of land revenue. Mrs. Pahwa submitted that Section 46 ma....
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.... of any error of law, could be said to have been committed by the respondents Nos.1 and 2 in passing the two impugned orders. Ms. Mehta very fairly conceded to the fact that the attached property is of the ownership of the writ applicant and not that of the respondent No.3. She also very fairly conceded to the fact that it is the respondent No.3 who could be termed as a dealer within the meaning of Section 46 of the Act, 2003 and the dues are recoverable from the respondent No.3 and not the writ applicant. However, Ms. Mehta pointed out that the two directors of the writ applicant-Company also happen to be the directors of the respondent No.3-Company and, in such circumstances, the attached property could be said to be of the ownership of the writ applicant too. Ms. Mehta invited the attention of this Court to the averments made in the affidavitin- reply filed on behalf of the respondent No.1, duly affirmed by one Shri Chirag Lallubhai Patel, State Tax Officer, Ahmedabad City. She placed reliance on the following averments; "6. The present Petition has been preferred by the petitioners, challenging the orders dated 23.01.2018 and 14.05.2018 with respect to the attachment o....
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....h huge dues are required to be safeguarded and hence, the attachment has been effected. It is encumberant upon the petitioners to establish that their transactions were clear and that no illegality has been committed and therefore, the present attachment orders may kindly not be disturbed. Copies of the assessment orders and demand notices are annexed herewith and marked as Annexure-R1 (Colly)." 11. In such circumstances, referred to above, Ms. Mehta prays that there being no merit in this writ application, the same be rejected. ANALYSIS 12. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the immovable property of the ownership of the writ applicant could have been attached for the purpose of recovering the dues payable by the respondent No.3 under the Act, 2003. 13. Before adverting to the rival submissions canvassed on either side, we must look into few relevant provisions of the Act, 2003. 14. Clause 2(10) of the Act, 2003 defines the word 'dealer'. The same reads as follows:- "dealer" means any person who, for the purpose of o....
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.... not in the course of business, buys, sells, supplies or distributes goods, directly or otherwise, from or to its members or other persons for cash, deferred payment, commission, remuneration or other valuable consideration, shall be deemed to be dealer for the purposes of this Act. (ii) The Central Government or a State Government or a local authority or railway administration or port trusts or a statutory body, which, whether or not in the course of business, buys, sells, supplies or distributes goods, directly or otherwise, for cash, deferred payment, commission, remuneration or other valuable consideration, shall be deemed to be dealer for the purposes of this Act. (iii) Any person or body, which disposes of any goods including unclaimed, confiscated, unserviceable, scrap, surplus, old, obsolete, discarded, waste or surplus product or goods, whether by auction or otherwise, directly or through an agent, for cash deferred payment, commission, remuneration or other valuable consideration, shall be deemed to be dealer for the purposes of this Act. Exceptions.-- The following shall not be deemed to be a dealer within the meaning of this clause, namely:- ....
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....default in respect of the whole of the amount then outstanding and the other installments shall be deemed to have been due on the same date as the installment in default. (4) Interest at the rate of eighteen per cent per annum shall be charged for the period as may be extended or the installments as may be granted under sub-section (2). (5) If the amount of tax and penalty, if any, is not paid within the time specified in sub-section (1) or extended under sub-section (2), as the case may be, the dealer or the person liable therefor shall be deemed to be in default in respect of that amount. (6) Where the amount of tax assessed or reassessed for any period, under section 34 or section 35, subject to revision, if any, under section 75, exceeds the amount of tax already paid by a dealer for that period, there shall be paid by such dealer, for the period commencing from the date of expiry of the time prescribed for payment of tax under sub-section (1), (2) or (3) of section 30 and ending on date of order of assessment, reassessment or, as the case may be, revision, simple interest at the rate of eighteen per cent per annum on the amount of tax not so paid or ....
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.... (3) Any person making any payment in compliance with a notice under this section shall be deemed to have made the payment under the authority of the dealer, and the receipt thereof by the Commissioner shall constitute a good and sufficient discharge of the liability of such person to the extent of the amount specified in the receipt. (4) Any person discharging any liability to the dealer after receipt of the notice referred to in this section, shall be personally liable to the Commissioner to the extent of the liability discharged or to the extent of the liability of the dealer for tax, penalty and interest, whichever is less. (5) Where a person to whom a notice under this section is sent objects to it by a statement in writing that the sum demanded or any part thereof is not due or payable to the dealer or that he does not hold any monies for or on account of the dealer, the Commissioner shall hold an inquiry and after giving to such person or dealer a reasonable opportunity of being heard, make such order as he thinks fit. (6) Any amount of monies which the aforesaid person is required to pay to the Commissioner, or for which he is personally liable ....
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..... Section 47 declares any transfer with the intent to defraud the revenue as void; "47. Transfer to defraud revenue void:- "Where a dealer after any tax has become due from him creates a charge on or parts with the possession by way of sale, mortgage, exchange or any other mode of transfer whatsoever of any of his property in favour of any other person with the intention of defrauding the Government revenue, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the dealer." 21. Section 48 clarifies that any amount payable by a dealer or any other person on account of tax, interest or penalty for which he is liable to pay to the Government shall be a first charge on the property of such dealer or as the case may be, such person. 22. It appears from the materials on record that the impugned order passed by the respondent No.1 dated 23.1.2018 is one of provisional attachment as provided under Section 45 of the Act, 2003. Section 45 makes it very abundantly clear that during the pendency of any proceedings of assessment or reassessment and turnover, escaping assessment, the Commissioner, with a view to prote....
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.... also happen to be the directors in the respondent No.3- Company, by itself, does not make the respondent No.3 the lawful owner of the property in question. The State should understand and appreciate that the property in question is of a legal entity, i.e, the Company registered under the Companies Act. Mr. Tarunkumar Jain and Mrs. Darshana Tarunkumar Jain are not the owners of the property in question. In their capacity as the directors of the Company, they cannot be said to be the owners of the land in question. The law is amply clear that even the dues of the private limited company cannot be recovered from the personal property of the director, if any, in the absence of any provisions to that effect in the Act, 2003. Be that as it may, the entire approach of the State Authorities in this regard is incorrect and not sustainable in law. 25. The writ applicant is the lawful owner of the attached land. The property, which has been attached, might have been given on lease to the respondent No.3, but by virtue of the same, it cannot be said that the property is of the ownership of the respondent No.3. The relationship is just of a lessor and lessee. The land, as on date, belongs t....
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....nst the assessee, and proceedings for recovery of the tax may be taken against the assessee alone. Under the Income-tax Act, 1961, a Hindu Undivided Family is a distinct taxable entity, apart from the individual members who constitute that family. Section 4 of the Income-tax Act charges to tax for any assessment year the total income of the previous year of every person and 'person' is defined in Section 2 (31) as including- (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or a body of individuals, whether incorporated or not, (vi) a local authority, and (vii) every artificial juridical person, not falling within any of the preceding sub-clauses. The Legislature having treated a Hindu undivided family as a taxable entity distinct from the individual members constituting it, and proceedings for assessment and recovery tax having been taken against the Hindu undivided family, it was not open to the Tax Recovery Officer to initiate proceeding against the manager of the Hindu undivided family for his arrest and detention. It is true that if properties of the family, movable and immovable, are to be attached proceeding....
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.... well as considering the settled legal position as stated hereinabove, and the documents produced on record, it is not in dispute that the property which is attached by the impugned notice is of the ownership of the petitioner No.1, who is the Director of the petitioner No.2 Company and therefore, as held by the Supreme Court in M. R. Chokshi v. State of Gujarat (supra), no attachment can be made. There is no provision in the Act fastening the liability of the Company to pay its sales tax dues to its Director and therefore, the impugned attachment notice dated 27.12.2017, is required to be quashed and set aside as the controversy in question is squarely covered by the above referred decision of this court. Other contentions raised by the learned advocates for the respective parties are not gone into in view of the settled position of law that the dues of the Private Limited Company cannot be recovered from the personal property of the Director in absence of any provisions to that effect in the Sales Tax Act. " 31. Ms. Mehta, the learned AGP laid much emphasis on the words "other person" figuring in Section 46 of the Act, 2003. The words "other person" should be read in context w....