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TMI Blog2008 (3) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Companies Act, 1956. It runs a distillery. It obtained a licence under the trade name of Normandy Breweries and Distilleries for manufacture of liquor under the Kerala Abkari Act (1 of 1077) M.E. It was registered as a dealer both under the Kerala General Sales Tax Act, 1963 ( the Act ) as also under the Central Sales Tax Act, 1956. It demised the factory in favour of one Eagle Distillery (P) Ltd. (lessee) by a deed of lease dated December 1, 1984, wherefor requisite approval was granted by the Government of Kerala on or about April 27, 1985. The sales tax authorities were intimated thereabout by communications dated May 4, 1985 and May 30, 1985. The said letters read as under: 4th May, 1985 I am writing this letter to inform you that I have leased out the Distillery unit in Cheemeni, Kasargod District to Eagle Distilleries Pvt. Ltd., having their registered office at Bangalore, Karnataka, for a period of five years from 1st December, 1984. The specific reason we have not renewed the registration this year, is this. We have asked Eagle Distilleries to take a new registration in their name. I am enclosing herewith a copy of the lease deed for your ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs for recovery which have culminated in those proceedings. The assessing authority, namely, the fourth respondent is directed to complete the final assessment under the Kerala General Sales Tax Act, 1963 for the years 1986-87 and 1987-88 with notice to the first petitioner-company and to the sixth respondent. Pursuant to or in furtherance of the said direction, a pre-assessment notice dated November 16, 1993 was served both upon the appellant and the lessee proposing to reject the returns and accounts as incorrect and incomplete and to finalise the assessment on the basis of the best judgment assessment as specified therein. The lessee did not respond thereto. Cause was shown by the appellant. In the assessment proceeding only the appellant represented. The assessing authority passed an order of assessment holding both the appellant as also the lessee jointly and severally liable for the sales tax dues both under the Act as also Central Sales Tax Act for the assessment years 1986-87 and 1987-88. Statutory appeals were preferred thereagainst and by a judgment and order dated January 30, 1995 the appellate authority allowed the said appeals in so far as the appellant wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was brought to the statute book only with effect from August 29, 1989 and had no retrospective effect. (iv) Liability to pay tax being upon 'a dealer' within the meaning of section 2, sub-section (8) of the Act, no assessment proceedings could have been initiated against the appellant. Mr. Y. Yashobant Das, the learned Senior Counsel appearing on behalf of the respondent-State, on the other hand, would submit: (i) That a finding of fact having been arrived at by the Tribunal and that a fraud had been committed by the appellant and the lessee , the impugned judgment should not be interfered with. (ii) The appellant having allowed its alleged lessee to use the registration number as also the prescribed forms C and D , which were supplied by the department to it on its asking, now it cannot turn around and contend that it was not liable to pay any tax. (iii) Since in the writ petition the subject-matter of challenge was not the order of assessment but the liability as a garnishee, the impugned judgment is unassailable. (iv) Assuming section 19C of the Act is not applicable, the preassessment notice as also the assessment proceedings having been cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Moreover, since the lease deed dated December 1, 1984 was terminated in toto, with effect from the very beginning, there is no lease deed and no relationship of lessor and lessee. In such a situation, the lessor becomes liable for the tax due on the business done in the name of M/s. Normandy Breweries and Distilleries Ltd., Cheemaeni. Likewise, since the lessee has admittedly conducted the business and collected tax, and has not remitted the same to the Government the lessee becomes liable for the business conducted. Thus, at any rate, the lessor and lessee are jointly and severally liable for the tax which is legitimately due to the Government. So, the order of assessment has to be restored. It was furthermore held: 26. Thus, since it has come out in evidence that the application for registration put in by the lessee was dismissed under the circumstances referred to above and the registration of the lessor continued in force and that the lessor has, without returning the delivery notes and the C forms issued in their favour to the department, thereby violated the mandatory provisions under the Rules and permitted the lessee to continue to do the business in the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed: 4 See at page 395 of [1961] 12 STC. It will be clear from this analysis of the impugned provisions of the Act that the purpose and object of the Act is to levy and collect tax for purposes of the general revenues of the State and the liability for payment is placed under section 3 upon the person effecting the sale. He is required by section 5 of the Act to keep books of account in the prescribed form and to submit to the Commercial Tax Officer and to such other officers as may be prescribed, a return in such form, containing such particulars and at such intervals, as may be prescribed. Along with the return, under section 6 he is required to pay the amount of tax due in respect of the motor spirit sold by him in retail during the preceding month according to the return. In order therefore that the State may have a check on the person from whom the tax is due section 4(1) provides for registration of dealers who carry on the business in motor spirit. Without such registration it would be impossible for the State to know the persons who are selling motor spirit and from whom the tax is due. . . See also Pramod Foods Pvt. Ltd. v. State of Kerala [1988] 69 STC 257 (Ker) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was also followed. Such a direction has been issued, whereupon the assessment orders have been passed. We at this stage, therefore, cannot direct the authority to reopen the proceedings once again, as was urged by the learned counsel. Reliance was also placed on the Commissioner of Income-tax, Madhya Pradesh, Nagpur v. Hukumchand Mohanlal AIR 1971 SC 2591 See [1971] 82 ITR 624 (SC). wherein it was held See at page 626 of [1971] 82 ITR.:- . . . The assessee, in the present case, does not fall within any of those clauses. There is no specific provision in the Act under which it can be said that the assessee is a person by whom income-tax is payable on the amount of ₹ 24,341 which came to her by way of remission on account of what had transpired in the lifetime of her husband. The Act does not contain any provision making a successor in business or the legal representative of an assessee to whom an allowance has already been granted, liable to tax under section 41(1) in respect of the amount remitted and received by the successor or the legal representative . . . We have noticed hereinbefore that a finding of fact has been arrived at that for all intent and purport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposive construction should, for the said purpose, be taken recourse to (See New India Assurance Company Ltd. v. Nusli Neville Wadia [2008] JT 1 SC 31). Ordinarily, we would have accepted the contention that prior to coming into force of section 19C of the Act, there did not exist any provision in the Act to assess two persons by fastening joint and several liability. However, the superior courts and, in particular, this court, would not come on the way of the Revenue to recover arrears of tax, if it is otherwise permissible in law. Apart from the finding of fact arrived at by the Tribunal, the appellant upon resumption of tenancy would become liable to pay tax, if it intends to carry on its business. The Act provides for the mode and manner in which the revenue may be recovered. The property of the dealer, namely, one in whose name the registration stood, can be proceeded with. Its properties may be subjected to attachment and sale. In that view of the matter, it is not a case where, this court, while exercising its jurisdiction under article 136 of the Constitution of India should interfere with the impugned judgment. In State of Karnataka v. Shreyas Papers P. L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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