TaxTMI 
TaxTMI 
2021 (4) TMI 264
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....ctively and to command the 1st respondent and its instrumentalities including respondents 2 to 4 not to interfere with the free possession and enjoyment of the property of the petitioner purchased as per Ext.P9 deed from the 5th respondent and cultivated with rubber and pineapple. 2. Events leading to the filing of this writ petition, chronologically, are as follows:- The Rubber Board granted to the 6th respondent Ext.P1 Dealers licence dated 20.02.1985. On 02.01.1986, the 6th respondent gave a Power of Attorney to the 7 th respondent to carry out certain transactions under the licence. At that time, the 7th respondent was indebted to the 5th respondent-South Indian Bank in his personal capacity. The 5th respondent-Bank had filed OS No.403/1986 in the Principal Sub Court, Kottayam, against the 7th respondent in the year 1986. 3. The Rubber Board cancelled the licence issued to the 6th respondent on 09.01.1987 as per Ext.P2, with effect from 15.01.1987. Subsequently, the Rubber Board, as per Ext.P3, granted Dealers licence to the 6th respondent again on 12.04.1989 for the period ending on 31.03.1992. The 6th respondent had cancelled the Power of Attorney given to the 7th re....
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....rattupetta. The Revenue Authorities refused to effect transfer of registry in favour of the petitioner, in view of the auction conducted by the Sales Tax authorities. The petitioner hence filed W.P.(C) No.10661 of 2002 before this Court. A learned Single Judge dismissed the writ petition as per Ext.P12, holding that the petitioner will have to establish his rights through a properly constituted civil suit. The petitioner filed W.A. No.2728 of 2007 against Ext.P12 judgment. A Division Bench of this Court, by Ext.P13 judgment, held that the petitioner can establish his rights through appropriate Forum. 8. The petitioner thereupon filed a revision petition against the auction sale conducted by the Sales Tax authorities on 11.02.1992, in which the State had bought the property in auction. The Commissioner of Land Revenue by Ext.P15 order dated 04.06.2008 dismissed the revision petition filed by the petitioner. The petitioner preferred Ext.P16 appeal dated 01.07.2008 to the Government. By Ext.P21 order dated 10.09.2009, the Government rejected the appeal filed by the petitioner. The petitioner is before this Court challenging Ext.P15 order of the Land Revenue Commissioner and Ext.P21....
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....te, the 7 th respondent was not Power of Attorney holder of the 6th respondent. Hence, the 7 th respondent could not have been mulcted with any liability on the basis of a Power of Attorney earlier held by him. Assuming without conceding that Section 19C applies, even then an independent tax assessment on the 7th respondent ought to have been made before proceeding against the properties of the 7th respondent under the Revenue Recovery Act, 1968 as Section 19C of the KGST Act, 1963 contemplates assessment of "such other person". 13. The learned Senior Counsel further pointed out that even going by the definition of defaulter contained in Section 2(e) of the Revenue Recovery Act and Section 34 thereof, assessment of the defaulter and fixation of liability is indispensable. There was no such assessment or fixation of liability on the 7th respondent under the Revenue Recovery Act. Therefore, attachment and sale of the property of the 7 th respondent are invalid. 14. The learned Government Pleader representing respondents 1 to 4 and 8, vehemently opposed the petition and contended that the Government had taken possession of the property and the usufructs were auctioned by the Gov....
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.... banks and financial institutions, contended the learned Government Pleader. 19. Learned Government Pleader urged that statutory creation of such first charge in favour of the State, is eo-instanti, as held by this Court in P.S. Basheer and others v. Pearl Food Products and others [2006 (2) KLT 346]. The liability to pay tax is automatic and depends only upon the charging section. It does not depend upon the adjudication as to the liability to tax, followed by the issuance of any assessment order and demand, and it was so held by this Court in Noushad Abbas and others v. Commissioner of Commercial Taxes, Thiruvananthapuram and others [2013 (3) KLJ 773]. 20. The learned Government Pleader, relying on the judgment of the Apex Court in Orissa Agro Industries Corporation Limited and others v. Bharati Industries and others [(2005) 12 SCC 725], argued that writ petition is not maintainable in view of the disputed questions of fact involved in this case. 21. I have heard learned Senior Counsel assisted by the counsel appearing for the petitioner, learned Government Pleader representing respondents 1 to 4, learned Standing Counsel appearing for the 5th respondent-Bank and the lear....
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....nt thereupon passed Ext.P21 order dated 10.09.2009. It is the said Ext.P21 order which is under challenge in this writ petition. As a Division Bench of this Court modified Ext.P12 judgment of the learned Single Judge and permitted the petitioner to avail remedies available to him, Ext.P12 judgment of the learned Single Judge cannot be treated as one deciding the issue involved finally, so as to constitute res judicata. 25. As regards delay and laches, it may be noted that the auction certificate in respect of the property in question was issued to the 5th respondent-Bank through court proceedings on 31.01.1996. The petitioner purchased the said property as per Ext.P9 sale deed dated 18.09.2001. The petitioner thereafter approached the authorities to remit land tax and to effect transfer of registry. The petitioner approached this Court for that purpose filing O.P. No.10661/2002 which was dismissed as per Ext.P12, on 19.05.2005. The petitioner promptly challenged the said judgment of the learned Single Judge and obtained liberty to prosecute his statutory remedies, as per Ext.P13 judgment dated 21.11.2007 of a Division Bench of this Court. Ext.P21 order dated 10.09.2009 impugned ....
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....t for recovery of sales tax dues of the 6th respondent. 29. Section 19C provides for Protective Assessment and enables Assessing Authorities to recover tax dues from agents, employees, managers, power of attorney holders, guarantees or persons who in any other capacity carrying on the business, in the name of a registered dealer. Section 19C of the KGST Act reads as follows:- "19C. Protective assessment:- Notwithstanding anything to the contrary contained in any judgment, decree, order, direction or decision of any Court, Tribunal or other Authority, where the assessing authority has reason to believe that any person is, or was carrying on business in the name of, or in association with any other person, either directly, or indirectly, whether as agent, employee, manager, power of attorney holder, guarantor or in any other capacity, such person and the person in whose name the registration certificate, if any, is taken, shall jointly and severally, be liable for the payment of the taxes penalty or other amount due under this Act which shall be assessed, levied and recovered from all or any of such person or persons as if such person or persons are dealers: ....
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.... in substantive law but no such right exists in procedural law. (iv) A procedural statute should not generally speaking be applied retrospectively where the result would be to create new disabilities or obligations or to impose new duties in respect of transactions already accomplished. (v) A statute which not only changes the procedure but also creates new rights and liabilities shall be construed to be prospective in operation, unless otherwise provided, either expressly or by necessary implication." 33. Section 19C of the KGST Act may, at the first blush, appear to be procedural in nature inasmuch as it does not create any new tax liability but only provides for recovery of tax already fell due. But, as far as persons like Power of Attorney holders and others enunciated in Section 19C are concerned, it affects their substantive property rights, since they are made liable for tax dues of a registered dealer. It may be noted that running the business of a registered dealer as his Agent or as his Power of Attorney holder is not per se an offence under any Indian law. It is for the first time that such persons have been made liable to be subjected to recovery pr....
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.... even substantive amendments retrospectively. If an enactment is expressed in a language which is fairly capable of either interpretation, it should be construed as prospective. 38. A reading of Section 19C would show that realisation of tax dues from persons like the petitioner contemplates assessment of tax dues. Therefore, it is clear that Section 19C is not procedural in nature, but on the other hand, creates a new liability on persons controlling business on behalf of registered dealers. 39. In the judgment in Mohammed Harid v. District Collector [2014 (2) KLT 102], the retroactive operation of Section 26C of the KGST Act came up for consideration before a Division Bench of this Court. By introduction of Section 26C with effect from 01.04.1999, the Directors of Private Companies were made jointly and severally liable for payment of sales tax, in cases where tax cannot be recovered from a Company. In the said judgment, this Court held that tax dues of a Private Company in respect of any assessment years prior to 01.04.1999 can be recovered from the Directors and if such recovery is made, it cannot be said that Section 26C is operated retrospectively. 40. The said judgm....