1965 (10) TMI 62 - HC - VAT and Sales Tax

Issues Involved:
1. Legality of arrest and imprisonment under Section 48 of the Andhra Pradesh Revenue Recovery Act.
2. Compliance with procedural requirements for arrest under Section 48.
3. Sufficiency of material for the Collector's belief of wilful nonpayment and fraudulent conduct.
4. Liability of individual versus Hindu Undivided Family (HUF) for tax arrears.
5. Legitimacy of the arrest warrant execution by a police official.

Detailed Analysis:

1. Legality of Arrest and Imprisonment under Section 48 of the Andhra Pradesh Revenue Recovery Act:
The petitioner challenged the legality of his arrest and imprisonment under a warrant issued by the District Collector of Mahabubnagar. The court referred to Section 48 of the Andhra Pradesh Revenue Recovery Act, which allows for the arrest and imprisonment of a defaulter if arrears cannot be liquidated by the sale of the defaulter's property and if the Collector believes that the defaulter is wilfully withholding payment or has engaged in fraudulent conduct to evade payment. The court cited the Supreme Court decision in *Collector of Malabar v. E. Ebrahim*, which upheld the constitutionality of Section 48 and clarified that arrest under this section is a mode of recovery and not a punishment for default.

2. Compliance with Procedural Requirements for Arrest under Section 48:
The petitioner argued that the Collector acted illegally by not first bringing the lands of the petitioner to sale to ascertain their value. The court held that Section 5 of the Act prescribes two alternative modes of recovery: sale of property or arrest and imprisonment. The court found that the Collector's satisfaction that the arrears could not be liquidated by the sale of the petitioner's property was justified, as the market value of the property was negligible compared to the arrears. The court also noted that the Collector's counter-affidavit and a report from the Tahsildar confirmed the insufficiency of the property value to meet the arrears.

3. Sufficiency of Material for the Collector's Belief of Wilful Nonpayment and Fraudulent Conduct:
The petitioner contended that there was no material to support the Collector's belief of wilful nonpayment and fraudulent conduct. The court found ample material, including the petitioner's alienation of properties, discontinuation of business, and continued operation of the business under different names, which justified the Collector's belief. The court concluded that the Collector was justified in believing that the petitioner was wilfully withholding payment and engaging in fraudulent conduct.

4. Liability of Individual versus Hindu Undivided Family (HUF) for Tax Arrears:
The petitioner claimed that the business was a joint family business, making the HUF the defaulter, not him individually. The court examined the records and found that the petitioner was the registered dealer and responsible for the business. Even if the business was a joint family business, Rule 22 of the Andhra Pradesh General Sales Tax Rules, 1957, would make every member of the HUF jointly and severally liable for the tax arrears. The court dismissed this contention, affirming the petitioner's individual liability.

5. Legitimacy of the Arrest Warrant Execution by a Police Official:
The petitioner argued that the warrant should have been executed by a revenue official, not a police official. The court found no substance in this argument, noting that Section 49 of the Act does not restrict the choice of agency for executing an arrest warrant. The court held that the arrest by the Deputy Superintendent of Police was lawful.

Conclusion:
The court concluded that the District Collector's actions under Section 48 of the Act were lawful and proper. The petition was dismissed, affirming the legality of the arrest and imprisonment of the petitioner for wilful nonpayment and fraudulent conduct in evading tax arrears.

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