1991 (10) TMI 301 - HC - VAT and Sales Tax

Summary

Issues:
1. Recovery of arrears of sales tax from a registered dealer for a different dealer's dues.
2. Dispute over liability to pay arrears of sales tax from a related business entity.
3. Legal validity of distraint order issued for recovery of disputed tax.
4. Interpretation of provisions under the Andhra Pradesh General Sales Tax Act regarding liability for tax arrears.

Detailed Analysis:
1. The petitioner, a registered dealer under the Andhra Pradesh General Sales Tax Act, disputed the recovery of arrears amounting to Rs. 1,03,181 for a different dealer, M/s. Kamal Oil Mill, which he claimed he was not connected with. The petitioner contended that the attempts to recover the tax from him were illegal and sought a declaration that the distraint order issued for recovery was arbitrary and should be quashed. The petitioner argued that he had paid substantial amounts towards arrears dues for another entity, M/s. Ambica Oil Mill, of which he was the proprietor, and should not be held liable for the dues of M/s. Kamal Oil Mill.

2. The respondents, in their counter-affidavit, asserted that the petitioner was the younger brother of a person involved with M/s. Kamal Oil Mill and that the petitioner was a nominal proprietor of M/s. Ambica Oil Mill, which they claimed was a continuation of M/s. Kamal Oil Mill. They argued that the petitioner's relationship with the individuals involved obligated him to pay the arrears due, either as a partner of M/s. Kamal Oil Mill or as a transferee. The court noted that the petitioner's connection with M/s. Kamal Oil Mill was not disputed, and based on the provisions of the Act, the petitioner could be held liable for the arrears either as a partner or a transferee.

3. The court considered the facts presented by both parties and concluded that the petitioner's conduct, including giving an undertaking to pay the dues if the other party did not, disentitled him from discretionary relief. The court found that the attempt to recover the arrears from the petitioner, given his connection with M/s. Kamal Oil Mill and the continuation of business under a different name, was not illegal or unsustainable. Consequently, the court dismissed the writ petition, ruling against the petitioner and upholding the recovery of the disputed tax amount from him.

4. The judgment highlighted the legal obligations of a registered dealer under the Andhra Pradesh General Sales Tax Act concerning liability for tax arrears, whether as a partner of a business entity or as a transferee. The court emphasized the importance of considering the factual and legal connections between related business entities and individuals in determining liability for tax dues. The judgment underscored the significance of complying with legal provisions and obligations under the Act, thereby upholding the recovery of arrears from the petitioner based on his association with the business in question.