1974 (1) TMI 103 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Liability of the petitioner to pay the entire assessment dues, including tax, penalty, and interest of the transferor firm.
2. Availability of two modes of recovery of such dues and whether the mode under the Orissa Public Demands Recovery (O.P.D.R.) Act is more onerous and violative of Article 14 of the Constitution.
3. Delay in seeking relief under Article 226 of the Constitution.

Detailed Analysis:

Point No. I: Liability of the Petitioner
The petitioner argued that he only purchased some stock of the transferor firm and not the entire business, thus he should not be liable for the transferor's tax dues. However, the court found that the petitioner had indeed purchased the entire business, as evidenced by statements on solemn affirmation made by the petitioner and his partner. According to Section 19(1) of the Orissa Sales Tax Act, the transferee of an entire business is liable for any unpaid tax of the transferor as if he were the dealer liable under the Act. The court held that this liability includes not just the tax, but also any penalties and interest. The court cited the Supreme Court's decision in C.A. Abraham v. Income-tax Officer, Kottayam, which established that penalties are an additional tax and are part of the tax liability.

Point No. II: Modes of Recovery and Article 14
The petitioner contended that Section 13(7) of the Act, which allows for recovery of unpaid tax as an arrear of land revenue, is more onerous than recovery through a civil suit and thus violates Article 14 of the Constitution. The court found that the Act provides only one mode of recovery, which is through the O.P.D.R. Act, and does not contemplate recovery through a civil suit. Section 22 of the Act bars any other proceedings except those provided under the Act, thus implicitly prohibiting civil suits for tax recovery. The court also noted that the O.P.D.R. Act includes provisions for appeal, revision, and review, ensuring sufficient checks and balances against arbitrary exercise of power. Therefore, the court rejected the argument that the O.P.D.R. Act is more onerous or discriminatory.

Point No. III: Delay in Seeking Relief
The court noted that the petitioner had delayed seeking relief under Article 226 of the Constitution. The transfer of the business occurred on 1st July 1963, and the certificate cases were started in 1966 and 1968. The petitioner filed objections which were rejected in 1967 and 1968, but he did not approach the court until July 1971. The court held that the petitioner should have sought relief earlier if he had a genuine grievance. The delay in seeking relief was considered undue, and thus the petitions were dismissed on this ground as well.

Conclusion:
The petitions were dismissed with costs, and the court held that the petitioner is liable for the entire tax, penalty, and interest of the transferor firm. The court also upheld the constitutionality of Section 13(7) of the Act, stating that it does not violate Article 14 of the Constitution. The delay in seeking relief further justified the dismissal of the petitions.