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TMI Blog1997 (8) TMI 488X X X X Extracts X X X X X X X X Extracts X X X X ..... roduce his evidence in rebuttal to the material or evidence which may be brought on record in support of the notice, annexure 8 and also to produce evidence in support of his reply. The respondent No. 2 will decide all objections taken in the reply by a speaking order, keeping in view the provisions of the Act, quoted in paras 8 and 9 supra. Thereafter, complaint may be filed against the petitioner, if so required by the order deciding the objections taken in the reply to the notice, annexure 8. 2.. The grievance of the review petitioner is that the notice dated September 13, 1990, annexure-8, should have been quashed and the abovequoted order contained in para No. 11 should not have been passed as Ratanada Chemicals Limited (respondent No. 3) has been held to be public limited company and not a private limited company, attracting the provisions of section 9D of the Rajasthan Sales Tax Act, 1954 (in short, the Act ). 3.. The learned counsel for the petitioner contended that provisions of section 16(3)(h) and section 16(5) of the Act have to be necessarily read with section 9D of the Act as they are not independently applicable. He also contended that the petitioner is not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore if the petitioner s liability cannot be fastened under section 9D he cannot be proceeded against under section 16(5), RST Act. 9.. There is another aspect of the matter. Section 16(5) comes into play even otherwise only when the company commits an offence punishable under section 16, RST Act. The notice in question accuses the petitioner-director of an offence under section 16(4) and not the company. The director as has already been held is not liable under section 9D and cannot be held liable even if it is taken that section 16(5) applies to companies including other than private companies unless the company itself is first charged under section 16(4). 10.. Therefore I am of the view that the impugned notice dated September 13, 1990 must go and therefore I accept the application for review. The findings given in paras 9 and 11 of the judgment under review to the extent directing the petitioner to face the proceedings in pursuance of the impugned notice dated September 13, 1990 are set aside as is the impugned notice itself. No order as to costs. J.P. BANSAL (Judicial Member).-This review petition has thrown up for consideration an important question with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.-For the purpose of sub-sections (4) and (5)- (a) Company means a body corporate, and includes a firm or other association of individuals; and (b) director in relation to a firm means a partner in the firm. 12.. It is not in dispute before us that the petitioner was the director of the public company which carried on its business under the name and style of M/s. Ratanada Chemicals Limited. This company wound up its business. Certain dues on account of tax were outstanding against it. The department thought it proper to fasten the tax liability upon the petitioner and decided to proceed against him because of the provisions contained in sub-section (5) of section 16 of the Act. A notice was issued to the petitioner who filed a writ petition before the honourable High Court. It was transferred for disposal to this Tribunal which on October 30, 1996 concluded that since the company in question was a public company no liability could be fastened upon the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at every person who at the time the offence was committed, was in-charge of and was responsible to the company for the conduct of its business shall be deemed to be guilty of such offence. Such person can get off the hook if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission thereof. Thus the sub-section (4) makes every person in-charge of, and responsible to, the company for the conduct of its business during the relevant period, liable for the consequences flowing from the offence so committed by the company. Sub-section (5) leads off with a non obstante clause and provides for a special case whether the offence has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company. In that case such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and be liable to be proceeded against and punished accordingly. Thus before the provisions of sub-section (5) can be attracted into application the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he can be punished accordingly. He cannot shake off his liability on the ground that he being the director of a public company cannot be proceeded against with the help of section 9D. The provisions of sub-section (5) of section 16 are not in any way whatever controlled by the provisions of section 9D of the RST Act. If I take a view different from the one I have taken it will defeat the scheme and objective of the RST Act. It will then be said that a director of the private company is liable whereas the director of a public company is not liable. This is a situation which cannot be countenanced. There is no reason why a special consideration should be shown towards the director of a public company. It may, however, be made clear that the director, etc., can be held guilty and proceeded against and punished accordingly only when it is proved that the offence committed by a public company has been committed with his consent or connivance or is attributable to his neglect. The question whether the offence has been committed is a question of fact which can be answered by the assessing authority or by the appellate authorities after due examination of the facts of the case. No opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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