1990 (7) TMI 324 - HC - VAT and Sales Tax

Summary

Issues:
1. Recovery of sales tax arrears from ex-President of a defunct society.
2. Grant of ad interim injunction during pendency of the suit.
3. Liability of individuals for sales tax arrears due from a registered society.
4. Applicability of Punjab General Sales Tax Act and Punjab Land Revenue Act.
5. Interpretation of provisions regarding liability under Societies Registration Act.
6. Comparison with similar cases regarding recovery of tax arrears from individuals.

Detailed Analysis:
1. The judgment deals with the recovery of sales tax arrears from the ex-President of a defunct society under the Punjab General Sales Tax Act, 1948. The arrears were sought to be recovered as land revenue, leading to a lawsuit filed by the ex-President and another party seeking an injunction against the recovery.

2. The court considered the application for ad interim injunction during the pendency of the suit. Initially rejected by the Sub Judge, I Class, Ludhiana, the application was later granted by the District Judge, prompting a revision petition by the State of Punjab and others challenging the injunction.

3. The main issue addressed was the personal liability of individuals for sales tax arrears due from a society registered under the Societies Registration Act. The court examined the definition of a "dealer" under the Punjab General Sales Tax Act and the absence of provisions holding members personally liable for the society's debts.

4. The judgment analyzed the applicability of the Punjab General Sales Tax Act and the Punjab Land Revenue Act in the context of the case. The court found that the suit challenging personal liability for sales tax arrears did not fall under the provisions barring such suits, as it focused on individual liability rather than contesting the assessment orders against the society.

5. Interpretation of provisions under the Societies Registration Act was crucial in determining the liability of the individuals. The court emphasized that the society, as a registered entity capable of owning property, should bear the burden of the sales tax arrears, and recovery should be limited to the society's assets.

6. The judgment referenced similar cases from other jurisdictions to support the decision. Cases involving recovery of tax arrears from members of registered societies highlighted the principle that liabilities should be enforced against the society's property rather than individual members, reinforcing the decision to grant the injunction in this case.

In conclusion, the court dismissed the revision petition, upholding the grant of ad interim injunction based on the absence of personal liability provisions for the sales tax arrears due from the defunct society. The judgment clarified the legal principles regarding recovery of tax arrears from registered societies and their members, emphasizing the distinction between society assets and individual liabilities.