9911796707
TMI Blog1968 (7) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Oil Mills located at Khadia in Junagadh District. It is the contention of the petitioner that this Bhagwanji Tulsidas was indebted to the petitioner in the sum of Rs. 6,750 and since Bhagwanji Tulsidas was not able to pay the said amount, the said debtor agreed to mortgage Hari Oil Mills to the petitioner, and to the mortgage three other creditors of Bhagwanji Tulsidas were joined as co-mortgagees. According to the petitioner, Bhagwanji Tulsidas executed a document signed by himself and under that document Bhagwanji mortgaged Hari Oil Mills in favour of the petitioner and three other creditors. Reserving his right to recover the amount due to the petitioner from the said Bhagwanji, the petitioner has contended that he has not agreed with the said Bhagwanji under the said mortgage document that he himself would discharge the arrears of sales tax due and payable by the said Bhagwanji. According to the petitioner, save and except the relationship of a creditor and debtor, the petitioner has no other business relationship as a partner or otherwise with the said Bhagwanji Tulsidas in the business of the said Hari Oil Mills at Khadia. Bhagwanji Tulsidas, the mortgagor, was assessed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sales tax. By his letter, dated 5th March, 1965, the petitioner objected against the aforesaid notice and contended that he was not liable to pay the arrears of sales tax due and payable by Bhagwanji Tulsidas, and that the petitioner was merely a creditor of Bhagwanji Tulsidas and that he had not signed the alleged mortgage document and that the petitioner had not accepted the liability to pay the sales tax due and payable by Bhagwanji Tulsidas and that Bhagwanji Tulsidas was still in possession of Hari Oil Mills, that the notices issued against the petitioner were illegal and he contended that the Sales Tax Authorities should recover the arrears of sales tax from Bhagwanji Tulsidas himself. These contentions urged on behalf of the petitioner were not accepted by the Sales Tax Officer, Junagadh, the second respondent herein; and by his order dated 15th April, 1965, the second respondent informed the petitioner that the petitioner's objections were overruled and the second respondent held by the said order that the petitioner had accepted the liability to pay the arrears of sales tax under the terms of the mortgage document and, therefore, the said amount would be recovered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that had ensued between the petitioner and the Sales Tax Authorities. It has further been contended that after the mortgage was executed by Bhagwanji Tulsidas in favour of the petitioner and three others, an endorsement was made on the copy of the mortgage deed in possession of Bhagwanji Tulsidas stating that in consideration of the amount of Rs. 23,000, which Bhagwanji owed on the foot of the mortgage to the mortgagees and which he was unable to pay as per the terms of the mortgage deed, he was selling machinery of the mills to all the four mortgagees and according to the second respondent's affidavit, this endorsement regarding the sale of the machinery, etc., of Hari Oil Mills for the sum of Rs. 23,000 was signed by all the four mortgagees and this document with the endorsement was produced before the Sales Tax Officer 1, Junagadh, by Bhagwanji Tulsidas, and, according to the second respondent, the Sales Tax Authorities were justified in demanding the amount due from Bhagwanji Tulsidas as arrears of sales tax from the petitioner. According to the second respondent, under the terms of the document of mortgage, the petitioner had agreed to make payment of Government dues out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hom notice has been served under sub-section (4) of section 38, or any person who holds or may subsequently hold money for or on account of such dealer, to pay to the Commissioner, either forthwith upon the money becoming due or being held or at or within the time specified in the notice, so much of the money as is sufficient to pay the amount due by the dealer in respect of the arrears of tax, penalty and sum forfeited under the Act, or the whole of the money when it is equal to or less than that amount. The Explanation to section 39 of the Act provides that for the purposes of section 39, the amount of money due to a dealer from, or money held for or on account of a dealer by any person, shall be calculated after deducting therefrom such claims, if any, lawfully subsisting, as may have fallen due for payment by such dealer to such person. Section 39 of the Act, inter alia, provides as follows: "Where a person to whom a notice under this section is sent proves to the satisfaction of the Commissioner that the sum demanded or any part thereof is not due to the dealer, or that he does not hold any money for or on account of the dealer, then, nothing contained in this section shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner when exercising powers under section 39 should have the power of determining the merits of the contentions of the debtor regarding his liability to the assessed dealer, then the Legislature would have made a proper provision conferring upon the Commissioner the relevant powers essential for the purpose of effectively holding such an enquiry. At page 511 in para. 12 of the judgment, the Supreme Court has pointed out: "Since there is no provision in the Act which confers on the specified authority the relevant and adequate powers to hold a formal enquiry, it would be difficult to accept the position that various questions which may arise between the working journalists and their employers were intended to be dealt with in a summary and an informal manner without conferring adequate powers on the specified authority in that behalf." That being the case, since in the instant case, the enquiry, which the Commissioner is authorised to hold under section 39 is a summary enquiry, and that too in rather an informal manner, it is not open to the Commissioner to enter upon the determination of the liability as between the petitioner and Bhagwanji Tulsidas, the assessed dealer. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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