9911796707
TMI Blog2001 (4) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Commercial Taxes, Hyderabad, second respondent herein, inspected the business premises of the petitioner in the month of August, 2000. As the petitioner did not deduct any tax at source on works contracts awarded by it, the second respondent issued show cause notice dated September 23, 2000 for the assessment years 1997-98, 1998-99 and 1999-2000 calling for an explanation as to why the turnovers relating to works contracts not be subjected to tax at source. Subsequently, the second respondent passed orders for the three assessment years demanding an amount of Rs. 1,27,854 for 1997-98, Rs. 8,02,252 for the year 1998-99 and Rs. 2,92,647 for the year 1999-2000 respectively. Aggrieved by the above orders passed by the second respondent, the petitioner preferred appeals and stay applications for all the assessment years before the Appellate Deputy Commissioner, Secunderabad Division. The Appellate Deputy Commissioner rejected all the stay applications for all the three assessment years on December 19, 2000. The petitioner being aggrieved by the orders passed by the Appellate Deputy Commissioner dismissing the stay petitions preferred revision petitions in form XXII on January 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 19, 2000 dismissing the stay applications, are pending before the Joint and Additional Commissioner (CT) (Legal), Hyderabad, the first respondent ought not to have taken coercive steps to recover the tax in the light of the judgment of a division Bench of this Court in Anab-E-Shahi Wines and Distilleries Private Limited v. Appellate Deputy Commissioner, Secunderabad Division, Nampally, Hyderabad [1995] 98 STC 386. Thirdly, the learned counsel would contend the coercive steps adopted by the first respondent are highly uncalled for, illegal and arbitrary. On the other hand the learned Special Government Pleader for Taxes would support the impugned action and would maintain that the impugned action does not suffer from any irregularity or illegality warranting interference by this Court. 6.. The first contention now urged before us by the learned counsel for the petitioner is not taken as a ground of attack of the impugned action in the affidavit filed in support of the writ petition. Now it is well-settled by the judgment of the apex Court in Bharat Singh v. State of Haryana AIR 1988 SC 2181, a party raising a point in a writ petition must plead not only relevant facts, but a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (5) Where any person to whom a notice under this section is sent proves to the satisfaction of the assessing authority that the sum demanded or any part thereof is not due by him 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 deemed to require such person to pay the sum demanded or any part thereof, to the assessing authority. (5-A) Where any person to whom a notice under sub-section (1) is sent, fails to pay to the assessing authority the sum demanded or any part thereof as required in the said notice, such sum shall be recoverable from such person as if it were an arrear of land revenue due from him. (6) The provisions of this section shall be without prejudice to any action that may be taken for the recovery of the money due from the assessee." A careful reading of sub-section (1) of section 17 makes it abundantly clear that sending of a copy of notice envisaged under section 17 to the dealer at his last address known to the assessing authority is a "must". But, the provisions of sub-section (1) of section 17 do not specify the point of time at which such a copy of notice should be forwarde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company or an insurer, it shall not be necessary for any pass book, deposit receipt, policy or any other document to be produced for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary. (v) Any claim respecting any property in relation to which a notice under this sub-section has been issued arising after the date of the notice shall be void as against any demand contained in the notice. (vi) Where a person to whom a notice under this sub-section is sent objects to it by a statement on oath that the sum demanded or any part thereof is not due to the assessee or that he does not hold any money for or on account of the assessee, then, nothing contained in this sub-section shall be deemed to require such person to pay any such sum or part thereof, as the case may be, but if it is discovered that such statement was false in any material particular, such person shall be personally liable to the Assessing Officer or Tax Recovery Officer to the extent of his own liability to the assessee on the date of the notice or to the extent of the assessee's liability for any sum due under this Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice, being illegal, be withdrawn. However, during the course of discussion, the petitioner-company was informed by respondent No. 2 that a sum of Rs. 16 lakhs is due from S.K. Gupta, C/o Standard Carriers, SCO 43, Sector 7, Chandigarh, on account of arrears of income-tax and a company known as Transholding Private Limited, SCO 457-58, Sector 35-C, Chandigarh, owes some money to the said S.K. Gupta of Standard Carriers. Since, Transholding Private Limited had failed to deposit the said amount in pursuance of notice under section 226(3) of the Act issued to the said company, the impugned notice, has been issued to the petitionercompany on the ground that it is a sister concern of M/s. Transholding Private Limited. The representatives of the petitioner-company immediately clarified the position to respondent No. 2 that the petitioner-company has nothing to do with Transholding Private Limited as the petitioner-company is a separate legal entity, managed by a separate board of directors and that it owes nothing to S.K. Gupta, the defaulter-assessee. It was further contended that the notice issued under section 226(3) of the Act is illegal, unjustified, without jurisdiction and ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice. After the person concerned objects by filing a statement on oath that the sum demanded or any part thereof is not due from him to the assessee then, recovery cannot be effected from him unless the Assessing Officer or the Tax Recovery Officer holds a further inquiry in which the concerned person is associated. On holding of the inquiry, if it is found that the statement made by the person concerned was false, then he becomes liable to pay the amount personally to the extent of his liability. In other words, after the statement on oath is filed by the concerned person that the sum demanded is not due from him to the assessee, then, the burden shifts on the department to prove that the statement filed by that person is false and that some amount is due from the concerned person to the assessee. Clause (x) of section 226(3) of the Act provides that if a person to whom notice under section 226(3) of the Act has been issued fails to make payment in pursuance thereof, only then he will be deemed to be an assessee in default. In the present case, no notice was sent to the petitioner under section 226(3)(i) of the Act and straightaway a notice was sent by the Assistant Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nishee notice dated January 29, 2001 to the petitioner-dealer on January 30, 2001 a day after the issuance of the notice to the garnishee would vitiate the validity of the garnishee notice on that count itself. It is not to suggest that the assessing authority can take his own sweet time to forward a copy of the garnishee notice to the dealer after issuing the same to the garnishee. The only thing to be seen is whether the assessing authority has forwarded a copy of the garnishee notice to the dealer within a reasonable time. Be that as it may, we do not find any prejudice caused to the petitioner on account of the fact that a copy of the garnishee notice was forwarded to the petitioner-dealer on January 30, 2001. In fact it is not the case of the petitioner at all that on the account of the fact that the assessing authority forwarded the copy of the garnishee notice on January 30, 2001, it was subjected to some prejudice. A division Bench of this Court consisting one of us (S.R. Nayak, J.) in Bankatlal Satyanarayana Parikh Co. v. Commissioner of Commercial Taxes A.P. [2001] 122 STC 236, has observed: "The dialectics of the audi alteram partem rule has, in contemporaneous admin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bad [1995] 98 STC 386, is in no way helpful to the petitioner. In that case, the petitioner had preferred an appeal against the order of assessment along with an application for stay. The appeal and stay applications were preferred on February 22, 1995. During the pendency of the appeal and the stay application, the assessing authority had started recovery proceedings by issuing garnishee notice under section 17(1) of the Act. Being aggrieved by that action, the petitioner had preferred the writ petition. The division Bench in that fact-situation has opined that so long as the interim order is not passed on the stay application by the appellate authority, coercive steps taken by the assessing authority under section 17(1) of the Act to recover the amount of tax under the assessment order was not proper. This decision of the division Bench fell for consideration before another division Bench of this Court in Stibene Chemicals Limited v. Additional Commissioner and Joint Commissioner of Commercial Taxes, Hyderabad (1999) 28 APSTJ 305. In that case, the stay application filed before the Appellate Deputy Commissioner was dismissed by the appellate authority on February 7, 1996. Against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation to a case where the first appellate authority has already rejected the application for stay and the matter is pending before the revisional authority. Therefore, we reject the second contention of the learned counsel for the petitioner. 17.. This takes us to the last contention of the learned counsel for the petitioner that the coercive step taken by the first respondent is highly uncalled for, illegal and arbitrary. Since the stay application filed by the petitioner was rejected by the first appellate authority, there was no legal bar or impediment for the first respondent to take steps envisaged under section 17 of the Act. On the other hand, it is trite to state that it is the duty of the first respondent to take necessary legal steps envisaged under the Act to recover the tax amount to subserve the public interest. The first respondent is armed with necessary power in that regard by the provisions of section 17(1) of the Act. Therefore, it cannot be said that the impugned action initiated by the first respondent under section 17(1) of the Act is arbitrary and unreasonable. 18.. In the result and for the foregoing reasons, we do not find any merit in this writ petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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