2019 (5) TMI 864 - HC - VAT and Sales Tax

Recovery of arrears of sales tax and penalty from the Legal Heirs of deceased - HELD THAT - The facts and circumstances of the present case, do not warrant an interpretation of, or adjudication upon the legal submissions made as aforesaid, simply for the reason that the legal representatives of the deceased sole Proprietor have consciously taken it upon themselves to defray the arrears of penalty for the periods in question by carrying forward the litigation and filing and pursuing the Tax Case (Revisions) before this Court - there is no question that the legal representatives are, and have admitted liability to the penalty levied. There is no question that the legal heirs of Mr.Abdul Gafoor are liable to defray the penalties that has been imposed upon him by the Commercial Tax Authorities. However, the present order is only addressed to the Firm and Partners who cannot be held liable for the arrears of the sole proprietorship. The impugned demand notice thus fails and is set aside - It is made clear that the Department is at liberty to recover the amounts from the legal heirs of Mr.Abdul Gafoor, in accordance with law. The impugned order contains a fatal flaw insofar as it is addressed to the petitioner Firm and one of its partner, both not being legal heirs of the deceased sole proprietor. The Firm and Partner cannot thus be fastened with the liability of the deceased proprietor. Refusal of the respondents to permit the first petitioner to download C Forms that are required for the conduct of business in order to avail concessional rate of tax - HELD THAT - Admittedly, the Firm does not have any arrears of sales tax, penalty or interest - the rejection by the Department of the petitioners' request to download 'C' forms is not in accordance with law. Petition disposed off.

Summary

Issues:
Challenge to order by Commercial Tax Officer, Liability of legal representatives for penalty, Refusal to issue 'C' Forms

Analysis:

1. Challenge to order by Commercial Tax Officer:
The Writ Petition was filed by a Partnership Firm and a Partner challenging the order passed by the Commercial Tax Officer, Mahe. The petitioners sought to quash the order and requested a direction to officials not to interfere with their business and restore the 'C' Form in the name of the first petitioner. The business involved dealing in Petroleum products in Mahe. The turnover was previously assessed under the Puducherry General Sales Tax Act and the Puducherry Value Added Tax Act.

2. Liability of legal representatives for penalty:
The legal heirs of the deceased sole Proprietor were held liable for the penalties imposed by the Commercial Tax Authorities. The legal representatives consciously took responsibility for defraying the arrears of penalty by pursuing legal proceedings. The Court noted that the legal representatives admitted liability to the penalty levied. However, the impugned order erroneously addressed the demand notice to the Firm and one of its partners, who were not legal heirs of the deceased proprietor. The Court set aside the demand notice, clarifying that the Department could recover the amounts from the legal heirs in accordance with the law.

3. Refusal to issue 'C' Forms:
The respondents refused to permit the first petitioner to download 'C' Forms necessary for conducting business to avail concessional tax rates. The Department cited Section 43 of the Act, allowing withholding of statutory forms if any tax or penalty is due. However, since the Firm had no arrears of sales tax, penalty, or interest, the rejection of the request to download 'C' Forms was deemed unlawful. The Court directed the Department to allow the petitioner to access the necessary forms immediately.

In conclusion, the Writ Petition was disposed of with the above directions, and connected petitions were closed without costs. The judgment clarified the liability of legal representatives for penalties, addressed the erroneous demand notice, and directed the issuance of necessary 'C' Forms for the business.