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1964 (9) TMI 40 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the petitioner-firm was liable under the Bombay Sales Tax Act.
2. Whether the recovery of the amount could be enforced under the Revenue Recovery Act.
3. Whether the petitioners owed any money to the Bombay firm.
4. The validity of the notices issued under the Bombay Sales Tax Act and the Revenue Recovery Act.
5. The appropriate forum for the realization of the disputed amount.

Issue-wise Detailed Analysis:

1. Liability under the Bombay Sales Tax Act:
The learned counsel for the petitioners argued that the petitioner-firm was not an assessee within the meaning of the Bombay Sales Tax Act, and therefore, no recovery of sales tax or penalty could be made from them. The court examined Section 17 of the Bombay Sales Tax Act, which allows the Collector to recover the amount due from any person who owes money to the dealer (assessee) after issuing a notice. The court found that a notice dated 27th September 1955, under Section 17, was served upon the petitioners, and they failed to respond or pay the amount demanded. Hence, the recovery certificate issued by the Collector of Bombay was deemed lawful.

2. Enforcement under the Revenue Recovery Act:
The petitioners contended that the demand could not be enforced under the Revenue Recovery Act. Section 3 of the Revenue Recovery Act was scrutinized, which permits the Collector of one district to send a recovery certificate to the Collector of another district for the recovery of arrears of land revenue. The court held that since the amount was recoverable as arrears of land revenue, the petitioners had become "defaulters" under Section 2(3) of the Act. Therefore, the notices issued by the respondents were valid and enforceable under the Revenue Recovery Act.

3. Petitioners' Debt to the Bombay Firm:
Initially, the petitioners claimed they did not owe any money to the Bombay firm. However, during the proceedings, it was revealed that petitioner No. 2 had admitted before the Collector of Bombay that a decree for Rs. 16,800 was passed against them, and they had made certain payments, leaving a balance of Rs. 7,515-5-6. The court noted that the petitioners did not raise this issue in their writ petition and only changed their stance during the arguments. The court ruled that they could not introduce a new argument at this stage.

4. Validity of Notices:
The court examined the validity of the notices issued under Section 17 of the Bombay Sales Tax Act and the Revenue Recovery Act. It was found that the petitioners had received the notice but failed to respond. The court held that the notices were valid as per the legal provisions, and the petitioners' objections were unsubstantiated.

5. Appropriate Forum for Realization:
The petitioners argued that the proper forum for the realization of the amount was the executing court, not under the provisions of the Revenue Recovery Act. The court disagreed, stating that the provisions of the Bombay Sales Tax Act and the Revenue Recovery Act provided ample powers to the Government to recover the amount in dispute. The court also highlighted that the petitioners had the remedy of filing a suit under Section 4 of the Revenue Recovery Act if they denied their liability, which they did not utilize.

Conclusion:
The court dismissed the petition, concluding that the recovery proceedings initiated by the respondents were lawful and valid under the relevant provisions of the Bombay Sales Tax Act and the Revenue Recovery Act. The petitioners' objections were found to be without merit, and no order as to costs was made.

 

 

 

 

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