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TMI Blog2000 (7) TMI 932X X X X Extracts X X X X X X X X Extracts X X X X ..... aging Director, Skyline Group of Companies, No. 80, 3rd Cross, Lavelle Road, Bangalore". While the address thus is shown to be of the first petitioner herein, the premises at which he is shown to be residing, namely, "No. 80, 3rd Cross, Lavelle Road, Bangalore" is stated to be the exclusive property of the second petitioner Mrs. Carmel Prabhu, wife of the first petitioner. The tax authorities ("Revenue ", for short) furnished this address on the footing that for the arrears of sales tax due from the company, its directors are also personally liable, and, as such, the fine levy warrant could be executed and the arrears of tax due may be recovered from them personally by means of attachment and sale of moveables found in the said premises. That the Revenue furnished this address with that understanding is apparent from the fact that before the Magistrate, it was contended on behalf of the present petitioners that warrant cannot be issued against an individual director, the proceeding initiated under section 13(3)(b) of the Act being against the company. The order sheet of June 11, 1999 in Criminal Misc. No. 81 of 1997 indicates that the Revenue had not agreed with this contention. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue Recovery Act, his Lordship Justice K.S. Paripoornan, as he then was, in Ramachandran v. State of Kerala [1984] 55 STC 209 (Ker), held that there was no provision which enabled the Revenue to proceed against the petitioner therein who was only a director of the company personally for arrears of sales tax due from the company, which was a distinct and different legal entity. I am therefore of the opinion that for recovery of sales tax arrears due from the company, its directors, petitioners herein, cannot be proceeded against personally. 3.. Of course, as Sri Bhavani Singh, learned High Court Government Pleader points out, where an offence is committed by a company under section 29 of the Act and where penalty is to be imposed, in view of section 31A of the Act, individually, the directors like the petitioners herein could also be made liable and the fine imposed can be recovered from the said individual directors. The logical conclusion of this position, as submitted by Sri Bhavani Singh, learned High Court Government Pleader, is that since the fine levied for the offence under section 29 of the Act thus is recoverable from an individual director where such director is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covery of the amount thereunder as if it is fine imposed by the learned Magistrate, should not be confused with the character of the amount recoverable, it being very much the tax assessed or any other amount due. Section 29, Criminal Procedure Code, 1973, speaks of the extent of, and imposes limitations on, the power of the Magistrate, inter alia, with regard to imposing sentence or fine. If clause (b) of sub-section (3) of section 13 of the Act is to be taken as relating to imposition of fine by the Magistrate of the First Class, then, in view of section 29(2), Criminal Procedure Code, 1973, the learned JMFC Kumta would not be in a position to recover any amount in excess of Rs. 5,000, because, that is the extent of limitation that is provided for imposition of fine by a Magistrate of First Class. In that view of the matter, in any proceeding under section 13(3)(b) of the Act, it is not the entire amount of tax assessed that is possible to be recovered, but, it would only be the said amount not exceeding the limit of fine that a Magistrate of First Class can impose under section 29(2) of the Criminal Procedure Code. That is hardly the scheme of section 13(3)(b) of the Act. As sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the power conferred by article 227 of the Constitution. In the context of section 421(1)(a) of the Criminal Procedure Code, the said rule 3 provides that all warrants issued under section 421(1)(a) of the Criminal Procedure Code for recovery of fine shall be addressed to the District Superintendent of Police concerned for execution by himself or by such officer as he may, by writing, appoint in that behalf. In today's context, wherever there is Commissioner of Police, reference to the District Superintendent of Police may be taken as reference to the Commissioner of Police. Responsibility in the matter of execution of warrant issued under section 421(1)(a) of the Criminal Procedure Code is, under the said rule 3 of the Rules of Practice, placed on a very highly responsible officer. Even if he appoints somebody else in that behalf, the said Rules require that such other person shall be an officer appointed in that behalf in writing by the said District Superintendent of Police or the Commissioner of Police, as the case may be. Even then, it is possible that, at times, in course of execution of the said warrant, moveables of the third party may be attached and sold. Sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a different procedure was thought of because of the absence of rules framed by the State Government concerned. In Sheth Chhaganlal Madhavji v. Bai Memunabi Amadmiya AIR 1955 Saurashtra 86, a Division Bench of the said court, after referring to the abovesaid decision of the Bombay High Court in Pandurang Venkatesh Malgi, In re. AIR 1932 Bom 476 and certain other decisions, felt that the fact that the State Government has not made rules for summary determination of claims under section 386(2) of the old Criminal Procedure Code [corresponding to section 421(2) of the present Criminal Procedure Code] should not deprive the claimant of the remedy open to him under the said provisions because, to deny that remedy on the ground that the rules have not been made would amount to rendering into the sub-section a dead letter till the rules are framed. The Division Bench further observed that if a strict view were to be taken, then, it becomes difficult to see how the warrant itself can be executed in the absence of rules. Therefore, agreeing with the view taken by the Madras High Court in Marina Narasanna v. Emperor AIR 1932 Madras 538, it was held that in the absence of rules made by the Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 13 of the Act, i.e. the Karnataka Sales Tax Act, 1957, exhaustive rules have been framed in Part V-B of the Karnataka Sales Tax Rules, 1957. Rule 38-N occurring in the said chapter V-B is of significance in this regard. While thus urging that the State Government may immediately frame rules, I am also of the opinion that, taking note of the alternatives that the different High Courts have thought of as referred to above, to meet the situation until the said rules are framed, an alternative should be thought of by us also. Any such alternative need not be confined to warrants issued under section 421(1)(a) of Criminal Procedure Code for recovery of sales tax arrears in a proceeding under section 13(3)(b) of the Act, but may hold the field in respect of every warrant issued under section 421(1)(a) of Criminal Procedure Code for levy of fine. The procedure so thought of, until the rules under section 421(2) are framed, shall be as follows: Whenever the court issues warrant under section 421(1)(a) of Criminal Procedure Code, where, in course of execution of the said warrant by the officer concerned, moveable property is attached and sought to be sold, if the third party, i.e. ot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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