2003 (1) TMI 665 - HC - VAT and Sales Tax

Summary

Issues:
Jurisdiction of the respondent to issue a direction prohibiting the petitioner from running the mill or leasing it out.

Analysis:
The petitioner sought a writ of prohibition against the respondent from enforcing a direction dated October 16, 2002, which prohibited further leasing or running of a specific mill. The mill in question was originally a partnership firm that underwent changes in partners over time. The petitioner eventually became the sole proprietor and leased the mill to another party. The respondent issued a notice citing tax arrears and directed the petitioner to stop running the mill. The petitioner contended that the respondent had no jurisdiction to issue such a direction.

It was acknowledged that the erstwhile partners of the partnership firm were liable for the dues, and proceedings under the Tamil Nadu Revenue Recovery Act had been initiated. The central question was whether the respondent had the authority to prohibit the petitioner from leasing or running the mill. The respondent argued that the notice was issued due to outstanding dues, but failed to cite any legal provision authorizing the prohibitory order. While acknowledging the ongoing recovery proceedings, the court found that there was no legal basis for the specific direction issued to the petitioner.

The court held that while the respondent was entitled to pursue recovery through legal means, there was no authority to issue a prohibitory direction as done in this case. Consequently, the court allowed the writ petition, declaring the direction dated October 16, 2002, as unenforceable. The respondent was, however, permitted to take appropriate legal actions for the recovery of the outstanding amount. The judgment closed the writ petition, granting no costs to either party.