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TMI Blog1965 (10) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... essrs Challa Ramaiah. On the basis of the returns submitted by the petitioner, assessments to sales tax were made by the concerned authority for the years 1956-57 to 1960-61. But, as a result of a surprise check conducted by the Special Commercial Tax Officer (Evasions), Hyderabad North, on 18th June, 1962, forty-two books of secret accounts relating to the business done by the petitioner, were recovered. Those books revealed huge suppressions by the petitioner of the turnover for the years 1956-57 to 1960-61. On the basis of that incriminating material, the Special Commercial Tax Officer issued notices to the petitioner to show cause why the assessments made previously should not be reopened and revised and, after considering the petitioner's objections, revised assessments were made in respect of the escaped turnovers for the said years under section 14(4) of the Sales Tax Act and penalties were levied at one-and-half times the tax. Thus the total amount payable by the petitioner was Rs. 2,48,734.09 nP. The petitioner was duly served with the assessment orders and demand notices in respect of the revised assessments. He did not choose to file any appeals against the assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 48 of the Act is in these terms: "When arrears of revenue, with interest and other charges as aforesaid cannot be liquidated by the sale of the property of the defaulter.........and the Collector shall have reason to believe that the defaulter......... is wilfully withholding payment of the arrears, or has been guilty of fraudulent conduct in order to evade payment, it shall be lawful for him to cause the arrest and imprisonment of the defaulter......... not being a female, as hereinafter mentioned; but no person shall be imprisoned on account of an arrear of revenue for a longer period than two years, or for a longer period than six months, if the arrear does not exceed Rs. 500, or for a longer period than three months, if the arrear does not exceed Rs. 50 provided that such imprisonment shall not extinguish the debt due to the State Government by the defaulter..." Section 49 of the Act, which lays down the procedure for arrest, provides as under: "The Collector shall issue his warrant for the arrest of the defaulter ......... which shall specify his.........name, the amount of revenue due and the date on which it became payable, and the warrant shall be signed and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax, can lawfully cause the arrest and imprisonment of the defaulter. This section read with section 5 makes it abundantly clear that the arrest of the defaulter is one of the modes, by which the arrears of revenue can be recovered, to be resorted to if the said arrears cannot be liquidated by the sale of the defaulter's property. There is not a suggestion In the entire section that the arrest is by way of punishment for mere default. Before the Collector can proceed to arrest the defaulter, not merely must the condition be satisfied that the arrears cannot be liquidated by the sale of the property of the defaulter but the Collector shall have reason to believe that the defaulter is wilfully withholding payment, or has been guilty of fraudulent conduct in order to evade payment. When dues in the shape of money are to be realised by the process of law and not by voluntary payment, the element of coercion in varying degrees must necessarily be found at all stages in the mode of recovery of the money due. The coercive element, perhaps in its severest form, is the act of arrest in order to make the defaulter pay his dues. When the Collector has reason to believe that withholding of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covery of arrears of revenue-one by the sale of the defaulter's movable and immovable properties, and the other by execution against the person of the defaulter by arrest and imprisonment. No doubt under section 48, before the Collector can proceed to order the arrest of the defaulter, he must be satisfied that the arrears of revenue cannot be liquidated by the sale of the defaulter's property. In our judgment, such satisfaction need not necessarily and invariably be arrived at by actually bringing the property of the defaulter to sale, but that could be done even without doing so where, as in the present case, the market value of the property is not even 1/20th of the amount due by the defaulter, and the amount that may be realised by the sale of the property cannot possibly wipe off the arrears or even a substantial part thereof. This is what the Collector says in paragraph 4 of his counter-affidavit: "The property the petitioner alleges to possess, is not at all sufficient to liquidate the arrears of tax. Under these circumstances, I had to exercise my powers under section 48 of the Revenue Recovery Act, the provisions of which are invoked for the realisation of the arrears of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Presidency for the confinement of debtors........" In construing that section, the learned judges observed that the scheme of section 13 of that Act clearly is that the Collector should first proceed against so much of the property of the defaulter as is necessary to satisfy the Government demand, and if the sale of the defaulter's property does not produce an amount sufficient to satisfy the demand, then only can the Collector cause the defaulter to be apprehended and confined in civil jail. Thus they regarded the sale of the defaulter's property as a condition precedent. In our opinion, the above decision is of no assistance in construing section 48 read with section 5 of the Act. The next contention on behalf of the petitioner was that there was no material upon which the Collector could reach the conclusion that the petitioner was wilfully withholding payment of the arrears or was guilty of fraudulent conduct in order to evade payment. This contention is devoid of force. As noticed supra, as soon as the books of the petitioner were seized, the petitioner went about selling his properties at Kosgi to his near relations and what is more, forthwith discontinued his busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undivided family. The returns submitted by him show that it was his own business and not a joint family business. Even assuming for the sake of argument that it was a joint family business, that will not avail the petitioner, because admittedly the business has been discontinued, and in such a case, rule 22 of the Andhra Pradesh General Sales Tax Rules, 1957, comes into play and every member of the Hindu undivided family would be jointly and severally liable. Rule 22 is in these terms: "When any business carried on by a firm, a Hindu undivided family or an association has been discontinued or dissolved, every person who was at the time of such discontinuance or dissolution a partner of such firm or Hindu undivided family or association, shall be jointly and severally liable to assessment under section 5, 5-A, 6 or 11 or any notification under section 9(1) and for payment of the tax assessed and/or penalty levied." The last contention on behalf of the petitioner was that the warrant of arrest should have been entrusted to a revenue official for execution, but inasmuch as in the present case it was entrusted to a police official, namely, the Deputy Superintendent of Police, the la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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