2015 (8) TMI 1302 - HC - VAT and Sales Tax

Liability of son (agent) working on behalf of his mother having power of attorney - Recovery of tax dues - Held that - The covenants in the power of attorney, Annexure-R1 to the statement of objections, makes it amply clear that petitioner is liable and responsible for the business transaction s including payment of tax, receiving notices of proceeding under the enactments, etc., for and on behalf of his mother Putta Thayamma, the proprietrix of M/s JSS Enterprises. Thus M/s JSS Enterprises having become liable to pay arrears of tax, the Assessing Authority justifiably exercised jurisdiction under Section 14 of the Act for recovery of the said arrears of tax. The notice issued to the State Bank of Mysore, where, admittedly petitioner holds current account, though allegedly as the proprietor of Preethi Wines , nevertheless the Bank having responded to the notice of demand and paid ₹ 2,23,288/- being the balance as arrears of tax from out of the said account, no fault can be found with the notice. In the circumstances, the grievance of the petitioner, apparently, is over the Bank having deducted the said sum of ₹ 2,23,288/- from out of the current account of the petitioner as proprietor of Preethi Wines, made over the payment to the Assessing Authority. That grievance is not the subject matter of this petition and therefore, petitioner is not entitled to the relief sought for. - Decided against the petitioner.

Summary

Issues: Recovery of tax arrears from a current account, liability under General Power of Attorney, legality of notice for tax recovery, entitlement to refund with interest.

Analysis:
1. Liability under General Power of Attorney:
The petitioner claimed to be the proprietor of a firm and the General Power of Attorney holder of his mother, who was the proprietrix of another business. The Assessing Authority sought to recover tax arrears from the petitioner as the business had defaulted in tax payments. The court found that the petitioner, acting on behalf of his mother's business, was liable for the tax dues as per the covenants in the Power of Attorney. The petitioner's actions, including entering appearance before the Authority, indicated his responsibility for the business transactions and tax payments.

2. Legality of Tax Recovery Notice:
The petitioner challenged the legality of the notice issued by the Assessing Authority to the bank where he held a current account, directing the deduction of tax arrears. The court held that since the petitioner's account was used for the business transactions, the Authority was justified in issuing the notice for recovery. The bank's compliance with the notice and deduction of the tax amount did not raise any fault with the legality of the notice.

3. Entitlement to Refund with Interest:
The petitioner sought a refund of the deducted amount with interest, claiming the deduction was illegal. However, the court determined that the grievance regarding the deduction from the petitioner's account was not the subject matter of the petition. Therefore, the petitioner was not entitled to the relief sought for, and the petition was rejected for lacking merit.

In conclusion, the court upheld the legality of the tax recovery notice issued to the bank for deducting tax arrears from the petitioner's account. The liability under the General Power of Attorney held by the petitioner for his mother's business transactions was established, leading to the rejection of the petition seeking a refund with interest.