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TMI Blog2019 (7) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... t the interest of the Government Revenue, may by order in writing, attach provisionally any property belonging to the dealer. The property of the ownership of the defaulting dealer can only be provisionally attached. The language of the statute is very clear. Section 45 provides that he may by order in writing attach provisionally any property belonging to the dealer . In such circumstances, in the first instance, the property which is of the ownership of the writ applicant could not have been attached for the purpose of recovery of the amount of tax, penalty or interest due and payable by the respondent No.3. It is not the case of the department that the writ applicant has defaulted, in any manner, with regard to payment of the tax under the Act, 2003. The writ applicant is the lawful owner of the attached land. The property, which has been attached, might have been given on lease to the respondent No.3, but by virtue of the same, it cannot be said that the property is of the ownership of the respondent No.3. The relationship is just of a lessor and lessee. The land, as on date, belongs to the writ applicant-Company. The impugned orders dated 23.01.2018 passed by the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner begs to Annex copies of the impugned orders dated 23.1.2018 and 14.5.2018 at Annexure-A colly. 3. The petitioner challenges the same on following among other grounds; ( I) The property of the petitioner company is attached under section 46, 47 and 48 of the Act for the tax dues of respondent no.3 company. ( II) The petitioner Company and respondent no.3 company are separate legal entities. ( III) Under section 46 and 47 of the Act, the property of the petitioner cannot be attached for the dues of the respondent no.3 company since petitioner Company is not a dealer. ( IV) The objections of the petitioner are not considered by the respondent no.2 and the impugned order is nonspeaking order. 4. The brief facts of the present petition are as follows: 4.1 The petitioner company is owner of the property situated at Survey No.783, Block No.480 at Taluka Matar, District: Kheda (hereinafter referred to as the subject property ). The petitioner company purchased the subject property on 20.2.1993 from one Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no.3, respondent no.1 has attached the property of the petitioner without giving any opportunity of hearing to the petitioner. The petitioner has already annexed a copy of the impugned order at Annexure-A. 4.7 The petitioner states that in the impugned order, against the property of the petitioner company the name of Shrimati Darshnaben Tarunkumar Jain and Shri Tarunkumar is shown as owners of the property. Whereas, the petitioner states that property is purchased in the name of petitioner company and in the revenue record also, the petitioner company is shown as the owner of the property. 4.8 The petitioner states that respondent no.1 vide letter dated 23.1.2018 informed the respondent no.2 to make entry of the attachment. Annexed hereto and marked as Annexure-H is the copy of the letter dated 23.1.2018. 4.9 The petitioner submits that pursuant to the letter by respondent no.1, respondent no.2 made a Mutation Entry No.3151 in the revenue records and issued a notice on 25.1.2018 to the petitioner under section 135D of the Gujarat Land Revenue Code, 1908. On receipt of the said notice, petitioner company herein gave its obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.2 is erroneous being contrary contrary to the provisions of the Act, 2003. Mrs. Pahwa submitted that the impugned order of attachment has been passed by the respondent No.1 in exercise of powers under Section 46 of the Act, 2003. Section 46 is with respect to the special powers of the tax authorities for recovery of tax as arrears of land revenue. Mrs. Pahwa submitted that Section 46 makes it abundantly clear that the recovery of the amount of tax, penalty or interest should be due from any dealer or other person by or under the provisions of the Act, 2003 or under any earlier law. It is submitted that the writ applicant is not a dealer from whom any tax is to be recovered under the provisions of the Act, 2003. It is submitted that the writ applicant will also not fall within the ambit of the words other person . To put it in other words, the submission of Mrs. Pahwa is that the land, which has been attached, is of the ownership of the writ applicant and the same has been taken on lease by the respondent No.3, i.e, the defaulting dealer. The writ applicant, being the owner of the attached land, is the lessor, whereas the respondent No.3 is the lessee. It is argued that for the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ownership of the writ applicant too. Ms. Mehta invited the attention of this Court to the averments made in the affidavitin- reply filed on behalf of the respondent No.1, duly affirmed by one Shri Chirag Lallubhai Patel, State Tax Officer, Ahmedabad City. She placed reliance on the following averments; 6. The present Petition has been preferred by the petitioners, challenging the orders dated 23.01.2018 and 14.05.2018 with respect to the attachment on the property situated at survey no.783, plot no. 480 mouje Tranaja, Taluka: Matar, District: Kheda. The main contention raised by the petitioner is that the attachment effected is on the property of the petitioner, however, vendor company i.e. respondent no.3 is a different entity and therefore, the attachment is bad. It has also been contended that the petitioner has leased the property in question to respondent no.3. It is indisputably coming on record that both the companies have two Directors I.Mr. Tarun Jain II. Mrs. Darshana Jain amongst other Directors. It is contended that as Asmita Papers Pvt. Ltd is different entity, therefore, the property of Veer Industries Pvt. limited which has been leased c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng gone through the materials on record, the only question that falls for our consideration is whether the immovable property of the ownership of the writ applicant could have been attached for the purpose of recovering the dues payable by the respondent No.3 under the Act, 2003. 13. Before adverting to the rival submissions canvassed on either side, we must look into few relevant provisions of the Act, 2003. 14. Clause 2(10) of the Act, 2003 defines the word 'dealer'. The same reads as follows:- dealer means any person who, for the purpose of or consequential to his engagement in or, in connection with or incidental to or in the course of his business buys, sells, manufactures, makes supplies or distributes goods, directly or otherwise, whether for cash or deferred payment, or for commission, remuneration or otherwise and includes,- ( a) the Central Government or a State Government or any local authority such as municipality or municipal corporation or panchayat, a statutory authority, a company, a partnership firm, a Hindu Undivided Family or any society, club, association or body, incorpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or a statutory body, which, whether or not in the course of business, buys, sells, supplies or distributes goods, directly or otherwise, for cash, deferred payment, commission, remuneration or other valuable consideration, shall be deemed to be dealer for the purposes of this Act. ( iii) Any person or body, which disposes of any goods including unclaimed, confiscated, unserviceable, scrap, surplus, old, obsolete, discarded, waste or surplus product or goods, whether by auction or otherwise, directly or through an agent, for cash deferred payment, commission, remuneration or other valuable consideration, shall be deemed to be dealer for the purposes of this Act. Exceptions.-- The following shall not be deemed to be a dealer within the meaning of this clause, namely:- ( i) an agriculturist who sells exclusively agricultural produce grown on land cultivated by him personally; ( ii) an individual who sells exclusively any fish or any seafood caught by him personally or by any member of his family on account of or on behalf of such individual; and ( iii) a charitable, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the rate of eighteen per cent per annum shall be charged for the period as may be extended or the installments as may be granted under sub-section (2). ( 5) If the amount of tax and penalty, if any, is not paid within the time specified in sub-section (1) or extended under sub-section (2), as the case may be, the dealer or the person liable therefor shall be deemed to be in default in respect of that amount. ( 6) Where the amount of tax assessed or reassessed for any period, under section 34 or section 35, subject to revision, if any, under section 75, exceeds the amount of tax already paid by a dealer for that period, there shall be paid by such dealer, for the period commencing from the date of expiry of the time prescribed for payment of tax under sub-section (1), (2) or (3) of section 30 and ending on date of order of assessment, reassessment or, as the case may be, revision, simple interest at the rate of eighteen per cent per annum on the amount of tax not so paid or any less amount thereof remaining unpaid during such period. ( 7) Where a dealer does not pay the amount of tax falling under subsectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person making any payment in compliance with a notice under this section shall be deemed to have made the payment under the authority of the dealer, and the receipt thereof by the Commissioner shall constitute a good and sufficient discharge of the liability of such person to the extent of the amount specified in the receipt. ( 4) Any person discharging any liability to the dealer after receipt of the notice referred to in this section, shall be personally liable to the Commissioner to the extent of the liability discharged or to the extent of the liability of the dealer for tax, penalty and interest, whichever is less. ( 5) Where a person to whom a notice under this section is sent objects to it by a statement in writing that the sum demanded or any part thereof is not due or payable to the dealer or that he does not hold any monies for or on account of the dealer, the Commissioner shall hold an inquiry and after giving to such person or dealer a reasonable opportunity of being heard, make such order as he thinks fit. ( 6) Any amount of monies which the aforesaid person is required to pay to the Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said Code. ( 2) Every order passed in exercise of the powers conferred by subsection (1) shall, for the purpose of section 73, 75, 78, 79 or 94, be deemed to be an order passed under this Act. 20. Section 47 declares any transfer with the intent to defraud the revenue as void; 47. Transfer to defraud revenue void: - Where a dealer after any tax has become due from him creates a charge on or parts with the possession by way of sale, mortgage, exchange or any other mode of transfer whatsoever of any of his property in favour of any other person with the intention of defrauding the Government revenue, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the dealer. 21. Section 48 clarifies that any amount payable by a dealer or any other person on account of tax, interest or penalty for which he is liable to pay to the Government shall be a first charge on the property of such dealer or as the case may be, such person. 22. It appears from the materials on record that the impugned order passed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing in Section 46 of the Act, 2003 deserves to be outright rejected. In what manner, the words other person figuring in section 46 should be understood, shall be explained by us a little later. However, we are sure of one thing that just because two directors, namely, Mr. Tarunkumar Jain and his wife Mrs. Darshana Tarunkumar Jain also happen to be the directors in the respondent No.3- Company, by itself, does not make the respondent No.3 the lawful owner of the property in question. The State should understand and appreciate that the property in question is of a legal entity, i.e, the Company registered under the Companies Act. Mr. Tarunkumar Jain and Mrs. Darshana Tarunkumar Jain are not the owners of the property in question. In their capacity as the directors of the Company, they cannot be said to be the owners of the land in question. The law is amply clear that even the dues of the private limited company cannot be recovered from the personal property of the director, if any, in the absence of any provisions to that effect in the Act, 2003. Be that as it may, the entire approach of the State Authorities in this regard is incorrect and not sustainable in law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax Recovery Officer requiring the defaulter to pay the amount within fifteen days from the date of the service of the notice, proceedings for recovery may be taken against the assessee for recovery of the tax. But under the scheme of the Act and the Rules, the assessee alone may be treated in default. The Act and the Rules contemplate that the notice for payment of the tax arrears may be issued against the assessee, and proceedings for recovery of the tax may be taken against the assessee alone. Under the Income-tax Act, 1961, a Hindu Undivided Family is a distinct taxable entity, apart from the individual members who constitute that family. Section 4 of the Income-tax Act charges to tax for any assessment year the total income of the previous year of every person and 'person' is defined in Section 2 (31) as including- (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or a body of individuals, whether incorporated or not, (vi) a local authority, and (vii) every artificial juridical person, not falling within any of the preceding sub-clauses. The Legislature having treated a Hindu undivided family as a taxable en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. (supra) is that section 45 can be invoked by the authority concerned only if the property belongs to the dealer, i.e., the dealer as defined under section 2(10) of the Act, 2003. To put it in other words, the defaulting dealer. 30. In Pankaj Krishnavadan Mashruwala (supra), a Coordinate Bench of this Court had observed as under:- 8. On a careful consideration of the submissions advanced by both the learned advocates for the parties as well as considering the settled legal position as stated hereinabove, and the documents produced on record, it is not in dispute that the property which is attached by the impugned notice is of the ownership of the petitioner No.1, who is the Director of the petitioner No.2 Company and therefore, as held by the Supreme Court in M. R. Chokshi v. State of Gujarat (supra), no attachment can be made. There is no provision in the Act fastening the liability of the Company to pay its sales tax dues to its Director and therefore, the impugned attachment notice dated 27.12.2017, is required to be quashed and set aside as the controversy in question is squarely covered by the above referred decision of this court. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt discharge of the liability of such person to the extent of the amount specified in the receipt. ( 4) Any person discharging any liability to the dealer after receipt of the notice referred to in this section, shall be personally liable to the Commissioner to the extent of the liability discharged or to the extent of the liability of the dealer for tax, penalty and interest, whichever is less. ( 5) Where a person to whom a notice under this section is sent objects to it by a statement in writing that the sum demanded or any part thereof is not due or payable to the dealer or that he does not hold any monies for or on account of the dealer, the Commissioner shall hold an inquiry and after giving to such person or dealer a reasonable opportunity of being heard, make such order as he thinks fit. ( 6) Any amount of monies which the aforesaid person is required to pay to the Commissioner, or for which he is personally liable to the Commissioner under this section shall, if it remains unpaid, be recoverable as an arrears of land revenue. ( 7) The Commissioner may apply to the court in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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