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TMI Blog2008 (7) TMI 889X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner, apparently under section 26 of the Kerala Value Added Tax Act, 2003. Exhibits P8 and P9 are demand notices issued proposing to recover the amounts from the petitioner. The petitioner is an Advocate. Case in brief of the petitioner is as follows: Exhibits P2 and P3 notices were issued against the petitioner for the assessment years 2004-05 and 2005-06. The case against the petitioner under section 26 of the Kerala Value Added Tax Act, 2003 is that the petitioner attested the photographs of certain persons, helping them to get registration under the KVAT Act and introduced them as neighbour. They were allegedly benamies of the petitioner's brother Shri T.P. Varghese, who carried on business, resulting in large scale evasion of tax. The petitioner submitted exhibits P4 and P5 replies to the two assessment orders. However, overruling the objections of the petitioner, exhibits P6 and P7 assessment orders are issued and following the same, exhibits P8 and P9 demand notices were issued for a huge amount against the petitioner also. A counter-affidavit is filed to which a reply affidavit is also filed. I heard Shri M.M. Abdul Aziz, learned senior counsel appearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r based on exhibits P8 and P9 should be kept in abeyance till a decision is arrived at by the appellate authority on her appeal. Accordingly, the writ petition is disposed of as follows: If the petitioner prefers appeals against exhibits P6 and P7 within a period of fifteen days from the date of receipt of a copy of this judgment, the appellate authority will consider the appeals on merits, including the question of jurisdiction if raised, and take a decision in accordance with law. If the petitioner prefers appeals as aforesaid, recovery steps against her pursuant to exhibits P8 and P9 shall be kept in abeyance till a decision is taken on the appeals. Cases referred to: Jagannath Hanumanbux v. Income-tax Officer [1957] 31 ITR 603 (Cal) (para 14) Lalji Haridas v. Income-tax Officer [1961] 43 ITR 387 (SC) (para 14) Partap Singh (Dr.) v. Director of Enforcement [1985] 155 ITR 166 (SC); [1985] 3 SCC 72 (para 9) Venkateswaran (A.V.), Collector of Customs v. Ramchand Sobhraj Wadhawasmi [1961] AIR 1961 SC 1506 (para 13) W.A. No. 1536 of 2008. M.M. Abdul Aziz, Senior Counsel for the appellant JUDGMENT The judgment of the court was delivered by H.L. DATTU C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e registration certificate, if any, is taken, shall jointly and severally, be liable for the payment of the tax, penalty or other amount due under this Act which shall be assessed, levied and recovered from all or any of such person or persons, as if such person or persons are dealers: Provided that before taking action under this section, the persons concerned shall be given a reasonable opportunity of being heard. The main words that require to be taken note of by this court while interpreting section 26 of the Act are the expression reason to believe , was carrying on business in the name of, or in association with any other person, either directly, or indirectly and, lastly, such person and the person in whose name the registration certificate, if any, is taken, shall jointly and severally, be liable for the payment of the tax . The expression reason to believe has been explained by the apex court in several of its decisions. One leading case is Dr. Partap Singh v. Director of Enforcement [1985] 155 ITR 166 (SC); [1985] 3 SCC 72. In the said decision, the court has observed that: (page 171 of ITR) The expression 'reason to believe' is not synonymous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and, in that, had specifically stated that she has nothing to do with the business conducted by T.P. Varghese. In spite of the explanation offered, the assessing authority without holding proper enquiry, has proceeded to pass the impugned order invoking its powers under section 26 of the Act. Even in the said order, except alleging that the petitioner had helped Sri T.P. Varghese in getting his registration done by the authorities under the Act, there is no other allegation that the petitioner is, either directly or indirectly, connected with the business of Sri T.P. Varghese. In view of the language used in section 26 of the Act, the legal position is beyond dispute, that the assessing authority must have some rational basis to form the belief that the petitioner was carrying on the business in the name of or in association with any other person either directly or indirectly, whether as an agent, employee, etc. This should be reflected in the order passed under section 26 of the Act. The non-compliance of the same would be fatal to the proceedings. In a case of this nature, in our opinion, in the absence of specific finding to the effect that the petitioner was, either directly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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