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TMI Blog2019 (3) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... les deduction of money owing and payable by the Government to such person. That, therefore, means that appropriation and adjustment is possible as against the monies owed by the Government to such person. It is only because that person has not paid the sum payable to the Government that this power is conferred. The other way or manner of recovery is that, the Assistant Commissioner of Customs or the Deputy Commissioner of Customs may recover or may require any other officer of Customs to recover the amount payable by detaining and selling any goods belonging to such person, or if the amount cannot be recovered from such person in the manner provided in Clause (a) or Clause (b) of Section 142, then, the Assistant Commissioner or the Deputy Commissioner can prepare a certificate signed by him specifying the amount due from such person and send it to the Collector of the District in which such person owns any property or resides or carries on his business and the said Collector, on receipt of such certificate, shall proceed to recover from such person the amount specified thereunder as if it were arrears of land revenue. Then there are other miscellaneous Rules but what we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tizen/petitioner before us was at one time a Director of a limited company, Sujata Verbatim Limited. The company has now changed its name and is now known as PDG Infotech Limited. 3. This company was incorporated on 24-12-1985 and its name underwent a change sometime in April, 2004. The nature of business and the place from which the company carried out its activities are mentioned in para 5, and then it is stated that the company stopped its manufacturing activities and thereafter even the petitioner ceased to be a Director of the company. Reliance is placed upon documents and records available in the office of the Registrar of Companies, State of Maharashtra, which, according to the petitioner, prove the point that the petitioner has no association with the company. 4. It is then alleged that there was an adjudication and stated to be into the matter of recovery of taxes, particularly the customs duty. 5. The fact that there were some legal proceedings became known to the petitioner only after he was confronted with a communication from the respondents. 6. He says that a demand notice dated 28-12-2018, copy of which is at ExhibitA, was served on him under which the 3r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 6. Employees' State Insurance Corporation, Chandigarh v. Gurdial Singh and others, reported in 1991 Supp (1) SCC 204. 10. On the other hand, Mr. Pradeep Jetly would submit that the communication at Exhibit-A does not allow any party, much less the petitioner, to raise a dispute about the dues of the company. The company owes to the Government this money and its dues are in the form of taxes. After a proper adjudication the amount has been crystalised. The law is very clear in that there is a liability to pay taxes and the adjudication at best determines the quantum. The dues are then crystalised in money and that is done by the adjudicatory process and which the company never questioned. Thus, the orders passed by the Competent Authorities under the Act are final and binding. The question is only of recovery. Mr. Jetly would submit that in this case it is the petitioner who was everything as far as the company is concerned. This is his company exclusively and its predominant shareholders were the petitioner and his wife. There is none other with substantial shareholding but for this couple. It is in these circumstances and when the taxes have been evaded that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customs; or (b) the [Assistant Commissioner of Customs or Deputy Commissioner of Customs] may recover or may require any other officer of customs to recover the amount so payable by detaining and selling any goods belonging to such person which are under the control of the [Assistant Commissioner of Customs or Deputy Commissioner of Customs] or such other officer of customs; or [(c) if the amount cannot be recovered from such person in the manner provided in clause (a) or clause (b)- (i) the [Assistant Commissioner of Customs or Deputy Commissioner of Customs] may prepare a certificate signed by him specifying the amount due from such person and send it to the Collector of the district in which such person owns any property or resides or carries on his business and the said Collector on receipt of such certificate shall proceed to recover from such person the amount specified thereunder as if it were an arrear of land revenue; or (ii) the proper officer may, on an authorisation by [Principal Commissioner of Customs] and in accordance with the rules made in this behalf, distrain any movable or immovable property belonging to or under the control of such person, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrary; (iii) in case the person to whom a notice under this section has been issued, fails to make the payment in pursuance thereof to the Central Government, he shall be deemed to be a defaulter in respect of the amount specified in the notice and all the consequences of this Chapter shall follow.] (2) Where the terms of any bond or other instrument executed under this Act or any rules or regulations made thereunder provide that any amount due under such instrument may be recovered in the manner laid down in sub-section (1), the amount may, without prejudice to any other mode of recovery, be recovered in accordance with the provisions of that sub-section. A perusal thereof would indicate that it enables recovery of sums due to Government. Now, where any sum payable by any person would mean a sum due and payable to the Government even by an artificial person such as a company in this case. It is stated in the legal provision, that where any sum payable by the person is not paid, the proper officer may deduct or may require any other officer of Customs to deduct the amount so payable from any money owing to such person which may be under the control of the officer or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... natural and artificial person. The question is not only this, inasmuch as this aspect is clear by the provision itself and we have no doubt in our mind that a defaulter can be a company or any artificial person, as well. The question is, when it comes to an artificial person can its Director be made personally liable, as in this case, for such dues? 18. The law requires a specific provision to be enacted in that behalf. In a decision, which has been rendered by a Division Bench of this Court in Writ Petition No.4117 of 2009 [Chandrakant Bhalchandra Garware v. The Union of India Ors.], on 5-5-2009 , this Court, after relying upon its previous Judgments, held as under: 2. The respondents are seeking by communication dated 1st January, 2009 to realise from the petitioner the dues of M/s. Garware Paints Limited. 3. To make a director liable, there has to be statutory provision under which a director is made personally liable for the dues of a company. This very issue had come up for consideration before a Division Bench of this Court in Sunil Parmeshwar Mittal vs. Dy. C. (Recovery Cell), C. Ex., Mumbai-I, 2005 (188) ELT 268 (Bom.). The learned Division Bench, after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpose, assess and collect duty under due authority of law. The expression 'levy and collect' are of widest significance and takes within its fold all the proceedings for raising money by the exercise of power of taxation. It means any step taken or any proceeding initiated for the ultimate purpose of determining the liability of the assessee and finally collecting tax from the person liable to pay such tax. As seen hereinabove, Section 4 of the Act provides for valuation of excisable goods for the purposes of charging of duty of excise and makes the assessee; which includes his agent liable to pay the excise duty under the Act. It would be right to say the duty is charged on goods, but the person who is liable to pay the duty is the person known as the assessee . Clause (a) of sub Section (3) of Section 4 defines assessee exhaustively to mean the person who is liable to pay the duty of excise under the Act and includes his agent. The duty can be recovered from the person who is an assessee within the meaning of definition. Under Section 6 no person can engage in the production or manufacture of any specified goods, included in the First schedule of the Act (now the new Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erfectly justified in contending that the order passed by the CEGAT in the case of Mr. S.P. Mittal binds the respondents since a specific finding has been recorded by the Tribunal holding that the order of confirming duty and imposing penalty was only against the company and not against the director Mr. S.P. Mittal. Consequently, his appeal was dismissed for want of locus standi. This order has been accepted by the Revenue. The order has become final and conclusive. The Supreme Court has explained the concept of res judicata in the case of Sulochana Amma v. Narayanan Nair [1995 (77) E.L.T. 785 (S.C.)]. The principle operates as a bar to try the same issue once over. It aims to prevent multiplicity of proceedings and accords finality to an issue, which directly and substantially had arisen in the former suit between the same parties or their privies, decided and became final, so that parties are not vexed twice over; vexatious litigation is put an end to and the valuable time of the Court is saved. It is based on public policy as well as private justice. The principle would very much apply, to all judicial proceedings whether civil or otherwise. It equally applies to quasijudicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of finances, so that the liabilities of the company can be met or dues payable by the company can be paid. Thus there is a team of officials which takes a decision in relation to the day today activities and management so also administration of the policy decisions. Something more than this and proof of involvement not only in the day-to-day activities but all affairs will also have to be placed on record to establish the piercing of veil. The argument now built, only on the basis of this principle and referred in the affidavit in reply is thus of no avail to Mr. Jetly. On that basis, we cannot hold that the petitioner is also liable for the dues of the company. 24. As a result of the above discussion, the writ petition succeeds. Rule is made absolute in terms of prayer clause (a). We declare that the dues of the company cannot be recovered from the petitioner personally. The demand notice to that extent is quashed and set aside. However, the notice can be pursued by the Authorities and the respondents insofar as the company and its properties and assets. All means of recovery as against the company are, therefore, open to be resorted to by the respondents. No order as to cos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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