2014 (6) TMI 871 - HC - VAT and Sales Tax

Imposition of penalty - Attachment of property - Held that - Since the petitioner did not pay the amounts, her properties are attached and steps are taken to sell the properties for releasing the amounts. Further, she is also one of the partners and therefore, she is jointly and severally liable to pay the entire amounts and hence, the action taken by the respondents is valid and legal. - As per law, all the partners are jointly and severally liable for the liabilities of Firm. If one of the partners discharges the liability in entirety, it is open to him/her to recover from the other partners, their share of liability. Secondly, as the petitioner is one of the partners in the partnership Firm and Proprietrix in another Firm, the action of the respondent clubbing both the liabilities and attaching the petitioner's property is in order. Thirdly, the respondent furnished the details and dates of service of assessment order. The said fact was not disputed by the petitioner. On the other hand, the petitioner has paid the tax levied on various dates. Hence, the contention of the petitioner that separate demand must be made for payment of penalty is not sustainable. - Decided against assessee.

Summary

Issues:
1. Validity of the order passed by the respondent for attachment of properties.
2. Liability of the petitioner as a partner in two separate firms.
3. Legality of clubbing arrears of two separate firms for auction.
4. Requirement of a separate demand for payment of penalty before attachment of properties.

Analysis:
1. The petitioner challenged the order of attachment dated 16.11.2007, arguing that she should not be solely liable for the entire partnership firm's debts. The respondent justified the attachment, stating that as a partner, the petitioner is jointly and severally liable for the firm's liabilities. The court held that partners are collectively responsible for firm debts, allowing one partner to recover from others. The court found the attachment valid and legal, dismissing the petition.

2. The petitioner contended that the two firms were distinct entities, objecting to the clubbing of their arrears for auction. However, the respondent defended the action, citing the petitioner's roles as a partner in one firm and a proprietor in another. The court upheld the respondent's decision to combine the liabilities, emphasizing the petitioner's joint liability as a partner and proprietor.

3. The petitioner argued against the attachment, claiming that a separate demand for penalty payment was necessary before seizing properties. The respondent countered by providing details of assessment orders and payment dates, asserting the legality of the attachment. The court found the petitioner's argument unsustainable, noting that previous tax payments were made without dispute. Consequently, the court ruled in favor of the respondent, dismissing the petition.

In conclusion, the court upheld the respondent's decision to attach the petitioner's properties for the firms' arrears, emphasizing the joint liability of partners in a firm. The court rejected the petitioner's arguments regarding the separate demand for penalty payment, stating that prior tax payments without dispute supported the attachment. As a result, the writ petition was dismissed, and no costs were awarded.