Case Law Details

Case Name : Veer Industries Ltd. Vs Commercial Tax Officer (Gujarat High Court)
Appeal Number : Special Civil Application No. 13718 of 2018
Date of Judgement/Order : 28/06/2019
Related Assessment Year :
Courts : All High Courts (5037) Gujarat High Court (461)

Veer Industries Ltd. Vs Commercial Tax Officer (Gujarat High Court)

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.

It appears from the materials on record that the impugned order passed by the respondent No.1 dated 23.1.2018 is one of provisional attachment as provided under Section 45 of the Act, 2003. Section 45 makes it very abundantly clear that during the pendency of any proceedings of assessment or reassessment and turnover, escaping assessment, the Commissioner, with a view to protect the interest of the Government Revenue, may by order in writing, attach provisionally any property belonging to the dealer. Section 45 further clarifies that such provisional attachment would cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1). Section 46 confers special powers to the tax authorities for recovery of the tax as arrears of land revenue.

To our understanding, more particularly, having regard to the scheme of the Act, 2003, Section 46 would come into play once the liability is assessed and final order is passed in that regard. For the purpose of effecting recovery of the amount of tax, penalty or interest as may be assessed by the authority, the Special Commissioner, Additional Commissioner and the Joint Commissioners under the Act, 2003 have been conferred with all the powers of the Collector under the Bombay Land Revenue Code. Thus, to put it simply, once the liability of the defaulting dealer is assessed and fixed, the next step would be to recover the requisite amount with penalty or interest. Such amount can be recovered by the authorities under the Act, 2003 by way of land revenue measures as provided under the Bombay Land Revenue Code.

From the aforesaid, two things are very amply clear. 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 argument of the learned AGP that the writ applicant would fall within the ambit of the words “other person” as figuring 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.

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.

In context of section 44, referred to above, the words “other person” means a person from whom any amount of money is due or may become due to a dealer on whom notice has been served under sub-section (1) or any person who holds or may subsequently hold money for or on account of such dealer. The writ applicant herein will not fall within the ambit of the words “other person”.

One aspect which needs to be clarified is that only the land belongs to the writ applicant. What has been leased is the open land. The plant and machinery is of the ownership of the respondent No.3. There should not be any difficulty in attaching the plant and machinery of the ownership of the respondent No.3. However, the land of the ownership of the writ applicant could not have been attached.

In the same manner, upon such attachment, there could not have been any charge created in favour of the State Government and a revenue entry could not have been mutated in that regard in the record of rights.

In the result, this writ application succeeds and is hereby allowed. The impugned orders dated 23.01.2018 passed by the  Commercial Tax Officer, Annexure-A as well as the order dated 14.05.2018 passed by the respondent No.2-Mamlatdar, mutating the entry in the revenue records, is hereby quashed and set aside. The petition is, accordingly, disposed of with the clarification as regards the plant and machinery of the ownership of the respondent No.3.

FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT

1. By this writ application under Article 226 of the Constitution of India, the writ applicant, a Company, registered under the provisions of the Companies Act, 1956 as a Limited Company, has prayed for the following reliefs:

“(A) YOUR LORDSHIPS may be pleased to issue an appropriate writ, order or direction, to quash and set aside the impugned orders dated 23.1.2018 passed by respondent no.1 and order dated 14.5.2018 passed by respondent no.2 attaching the property of the petitioner situated at Survey No.783, Block No.480 Mouje Tranaj, Taluka: Matar, District: Kheda, as being without Jurisdiction, arbitrary, illegal, null and void;

(B) YOUR LORDSHIPS may be pleased to stay order dated 23.1.2018 and order dated 14.5.2018 pending the admission, hearing and final disposal of this petition and further be pleased to direct the respondents to remove the attachment of the property situated at Survey No.783, Block No.480 Mouje Tranaj, Taluka: Matari, District: Kheda;

(C ) YOUR LORDSHIPS be pleased to grant such other and further relief as may be deemed fit by this Hon’ble Court, in the interest of justice.”

2. The case of the writ applicant, in its own words, as pleaded in the writ application, is as under:

2. The petitioner, by way of the present petition begs to challenge the order dated 23.1.2018 passed by respondent no.1 under 46, 47 and 48 of The Gujarat Value Added Tax (hereinafter referred to as “The Act”) and consequent order dated 14.5.2018 passed by respondent no. 2 attaching the property of the petitioner situated at Survey No.783, Block No.480 Mouje Tranaj, Taluka: Matar, District: Kheda. The petitioner 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 Fatabhai/Ashabhai. Annexed hereto and marked as Annexure-B is a copy of the indemnity bond dated 20.2.1993. The petitioner states that the subject property is also entered into revenue records. Annexed hereto and marked as Annexure-C is a copy of Form No.7.

4.2 The petitioner company entered into a lease deed with the respondent no.3 company on 12.8.2010 for a period of forty years, giving on lease the aforementioned property. Annexed hereto and marked as Annexure-D is the copy of the lease deed dated 12.8.2010.

4.3 The petitioner submits that it is relevant to note here that respondent no.3 is doing business of packing materials and chemicals. The petitioner states that vide order dated 25.2.2015 the property of the petitioner was attached for the tax dues of respondent no.3 company, though the petitioner company and respondent no.3 company are separate legal entities. Annexed hereto and marked as Annexure-E is copy of the order dated 24.2.2015 passed by tax authorities.

4.4 The petitioner submits that the petitioner herein aggrieved by the order so passed by the respondent no.1 officer had filed Special Civil Application being No.7454 of 2016 challenging the said order attaching the property of the petitioner company on various grounds. Annexed hereto and marked as Annexure-F is a copy of the memo of Special Civil Application No.7454 of 2016.

4.5 The petitioner submits that the Ld. AGP made a statement that the attachment which was subject matter of the petition had lapsed and therefore vide order dated 9.6.2016 this Hon’ble Court was pleased to dispose of the said petition on the ground that the attachment of the immovable property which was subject matter of the petition lapsed upon completion of period of one year from date of issue of the order dated 24.2.2014. This Hon’ble Court had further recorded that the authority shall act on lapsing of the order of attachment. Annexed hereto and marked as Annexure-G is a copy of the order dated 9.6.2016.

4.6 The petitioner states that however, again vide order dated 23.1.2018, the respondent no.1 passed an order under section 46, 47 and 48 of the Act attaching the property of the petitioner for the dues of respondent no.3 company. The petitioner states that by the impugned order passed against respondent 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 objection. Annexed hereto and marked as Annexure-I is a copy of the objections dated 25.1.2018.

4.10 The petitioner submits that without considering the objections of the petitioner herein and without considering the clear legal position, respondent no.2 herein confirmed Mutation Entry No.3151 thereby putting on record the attachment as sought by the respondent no.1.”

3. Thus, it appears from the pleadings and the other materials on record that the writ applicant is the lawful owner of the immovable property in the form of land bearing Survey No.783, Block No.480, situated at Mouje Tranaj, Taluka: Matar, District: Kheda. The writ applicant entered into a lease deed with the respondent no.3-Company dated 12.8.2010 for a period of 40 years insofar as the immovable property, referred to above, is concerned. It appears that the respondent No.3 is in the business of packing materials and chemicals. The respondent No.3 has put up a plant with machinery on the leased land. The respondent No.3 seems to have defaulted in the payment of tax under the Gujarat Value Added Tax Act, 2003. In such circumstances, the respondent no.1, Commercial Tax Officer (IV), Ahmedabad passed an order dated 23.1.2018 of attachment of the property in question. The order of attachment is at Page-11 of the paper-book as Annexure-A. It appears that pursuant to the order of attachment passed by the respondent no.1 under the provisions of the Act, 2003, the respondent no.2-Mamlatdar, Taluka: Matar passed an order dated 14.05.2018 in exercise of his powers under the provisions of the Gujarat Land Revenue Code mutating the Revenue Entry No.3151 in the revenue records with respect to the property in question. The order passed by the Mamlatdar creates a charge of the State Government over the property in question.

4. Being dissatisfied with such action on the part of the respondent No.1, the writ applicant has come up with this writ application with a prayer that the order of attachment could not have been passed as the land is of the ownership of the writ applicant and the writ applicant is not a defaulter under the provisions of the Act, 2003.

5. Mrs. Pahwa, the learned counsel appearing for the writ applicant vehemently submitted that the order passed by the respondent No.1 as well as the order passed by the respondent No.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 dues payable by the defaulting dealer, i.e., the respondent No.3 under the Act, 2003, the land of the ownership of the writ applicant could not have been attached. It is argued that the power of attachment can be exercised only if the dealer has defaulted in the payment of the tax and such tax along with penalty or interest can be recovered by attaching the property of such dealer. Mrs. Pahwa submitted that as the respondent No.3 is not the owner of the attached property and it is the writ applicant who is the lawful owner, the impugned order of attachment could not have been passed and is not sustainable in law.

6. Mrs. Pahwa, in support of her submissions, has placed reliance on a decision of this Court in the case of State of Gujarat vs. Jwelly Tea Co., reported in (2016) 90 VST 501 (Guj);

7. Mrs. Pahwa also placed reliance on one another decision of this Court in the case of Pankaj Krishnavadan Mashruwala vs. State of Gujarat, dated 11.04.2019 passed in the Special Civil Application No.17890 of 2018.

8. In such circumstances, referred to above, Mrs. Pahwa prays that there being merit in this writ application, the same may be allowed and the order of attachment passed by the respondent No.1 as well as the order passed by the Mamlatdar, creating a charge over the property in the revenue record be also quashed.

9. On the other hand, this writ application has been vehemently opposed by Ms. Maithili Mehta, the learned AGP appearing for the respondents Nos.1 and 2. None appears for the respondent No.3.

10. Ms. Mehta submitted that no error, not to speak of any error of law, could be said to have been committed by the respondents Nos.1 and 2 in passing the two impugned orders. Ms. Mehta very fairly conceded to the fact that the attached property is of the ownership of the writ applicant and not that of the respondent No.3. She also very fairly conceded to the fact that it is the respondent No.3 who could be termed as a dealer within the meaning of Section 46 of the Act, 2003 and the dues are recoverable from the respondent No.3 and not the writ applicant. However, Ms. Mehta pointed out that the two directors of the writ applicant-Company also happen to be the directors of the respondent No.3-Company and, in such circumstances, the attached property could be said to be of 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 could not have been attached.

7. I say and submit that it is worth noting that when the details of Veer Industries and Asmita papers Pvt. Ltd. were searched, in both the companies, the above mentioned two individuals were found as Directors and therefore, the contention raised that the lease has been executed by Veer Industries in favour of Asmita Papers Pvt. Ltd., & the present property could not have been attached, is a technical contention raised only with a view to dupe the department of its dues and. with an intention that the attachment can be removed.

8. I say and submit that the property in question which has been attached has land worth ₹ 25 crores and along with that it also has machinery to the tune’ of ₹ 15 Crores. I say and submit that as far as the approximate dues are concerned, those are ₹ 30,26,11,203 and interest is getting accrued over it.

9. I say and submit that when the attachment is effected on the property, it is both on the land as well as the machinery and especially, considering the fact that the transactions are paper transactions, where same directors are involved such smart tactics are generally adopted only with a view to dupe the department. The Directors cannot therefore, escape liability.

10. I say and submit that in the present case, the transactions are paper transactions and such transactions cannot be said to be not within the knowledge of the directors, especially, considering the fact that these transactions are only with a view to take tax benefit, which otherwise is not available to them. During the assessment from year, 2007-08 to 2012-13 dues have arisen and therefore, such huge dues are required to be safeguarded and hence, the attachment has been effected. It is encumberant upon the petitioners to establish that their transactions were clear and that no illegality has been committed and therefore, the present attachment orders may kindly not be disturbed. Copies of the assessment orders and demand notices are annexed herewith and marked as Annexure-R1 (Colly).”

11. In such circumstances, referred to above, Ms. Mehta prays that there being no merit in this writ application, the same be rejected.

ANALYSIS

12. Having heard the learned counsel appearing for the parties and having 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, incorporated or not, of persons which carries on business;

(b) a casual dealer, that is to say, a person who whether as principal, agent or in any other capacity, undertakes occasional transaction of a business nature in any exhibition-cum-sale or auction or otherwise in the State, whether for cash, deferred payment, commission, remuneration or other valuable consideration;

(c) an auctioneer, who sells or auctions goods belonging to any principal whether disclosed or not and whether the offer of the intending purchaser is accepted by him or by the principal or a nominee of principal;

(d) a factor, broker, commission agent, del credere agent or an auctioneer or any mercantile agent, by whatever name called, who carries on business on behalf of any principal whether disclosed or not;

(e) any person who transfers, otherwise than in pursuance of a contract, property in any goods for cash, deferred payment or other valuable consideration;

(f) any person who transfers property in goods (whether as goods or in some other form) involved in the execution of a works contract;

(g) any person who delivers goods on hire purchase or any system of payment by installments;

(h) any person who transfers the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; and

(i) any person who supplies, by way of or as part of any service or in any other manner whatsoever, goods being food or any other article for human consumption or any drink (whether or not intoxicating) where such supply or service is for cash, deferred payment or other valuable consideration.

Explanation.– (i) A society (including a co-operative society), club or firm or an association, which, whether or not in the course of business, buys, sells, supplies or distributes goods, directly or otherwise, from or to its members or other persons for cash, deferred payment, commission, remuneration or other valuable consideration, shall be deemed to be dealer for the purposes of this Act.

(ii) The Central Government or a State Government or a local authority or railway administration or port trusts 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, religious or educational institution, carrying on the activity of manufacturing, buying, selling or supplying goods, in performance of its functions, for achieving its avowed objects, which are not in the nature of business.”

15. The word “person” is defined in clause (15) of the Act, 2003. The same reads as under;

(15) “person” includes an individual, a joint family or Hindu Undivided Family, a company, a firm, an association of persons or body of individuals, whether incorporated or not, a society, club or other institution, a local authority, the Central Government or a State Government and every artificial juridical person not falling within any of the preceding descriptions;”

16. Section 42 of the Act, 2003 provides for the payment and recovery of tax and interest on delayed payment. The same reads thus:-

42. Payment and recovery of tax and interest on delayed payment.

(1) The amount of tax assessed, reassessed or becoming payable for any period under section 32, 33, 34, 35, 75 or 79, less any amount already paid by the dealer in respect of such period, shall together with penalty and interest if any that may become payable under any of the provisions of this Act, be paid by the dealer or the person liable therefor into a Government treasury or in such other manner as may be prescribe d within thirty days from the date of service of notice of demand issued by the Commissioner for this purpose.

(2) On an application by the dealer, the Commissioner may in respect of any particular dealer or person and for reasons to be recorded in writing, extend the time for payment or allow payment by installments, subject to such conditions as he may think fit to impose in the circumstances of the case.

(3) In a case where payment by installments is allowed under subsection (2) and the dealer or the person liable for such payment commits default in paying any one of the installments within the time fixed by the Commissioner under that sub-section, the dealer or the person shall be deemed to be in default in respect of the whole of the amount then outstanding and the other installments shall be deemed to have been due on the same date as the installment in default.

(4) Interest at 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 subsection (1) on or before the prescribed date, then there shall be paid by such dealer for the period commencing on the specified date and ending on the date of payment, 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 :

Provided that where security, other than in the form of surety bond, has been furnished by a dealer under subsections (1) and (2) of section 28, the Commissioner may, for good and sufficient reasons to be recorded in writing, realise any amount of tax, penalty or interest remaining unpaid as aforesaid or part thereof by ordering forfeiture of the whole or any part of the security.”

17. Section 44 of the Act, 2003 provides for the special mode of recovery. The same reads as follows;

44. Special mode of recovery:-

(1) Notwithstanding anything contained in any law or contract to the contrary, the Commissioner may, at any time or from time to time, by notice in writing, a copy of which shall be forwarded to the dealer at his last known address, require,–

(a) any person from whom any amount of monies is due, or may become due, to a dealer on whom notice has been served under sub-section (1), or

(b) any person who holds or may subsequently hold monies for or on account of such dealer, to pay to the Commissioner, either forthwith upon the monies becoming due or being held or within the time specified in the notice (but not before the monies becomes due or is held as aforesaid) so much of the monies as is sufficient to pay the amount due by the dealer in respect of the arrears of tax, penalty or interest under this Act, or the whole of the money when it is equal to or less than that amount.

Explanation.– For the purposes of this sub-section, the amount of monies due to a dealer from, or monies held for or on account of a dealer by any person, shall be calculated by the Commissioner after deducting therefrom such claims, if any, lawfully subsisting, as may have fallen due for payment by such dealer to such person.

(2) The Commissioner may amend or revoke any such notice or extend the time for making any payment in pursuance of the notice.

(3) Any 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 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 whose custody there is monies belonging to the dealer for payment of the amount of such monies towards the outstanding amount of tax, interest and penalty payable by the dealer.”

18. Section 45 provides for the provisional attachment. The same reads as follows;

45.Provisional attachment:-

1) Where during the pendency of any proceedings of assessment or reassessment of turnover escaping assessment, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may by order in writing attach provisionally any property belonging to the dealer in such manner as may be prescribed.

(2) Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1).”

19. Section 46 is with respect to the special powers of the tax authorities for recovery of tax as arrears of land revenue.

46. Special powers of tax authorities for recovery of tax as arrears of land revenue.

(1) For the purpose of effecting recovery of the amount of tax, penalty or interest due from any dealer or other person by or under the provisions of this Act or under any earlier law, as arrears of land revenue –

(i) the Commissioner, the Special Commissioner, Additional Commissioner and the Joint Commissioners shall have and exercise all the powers and perform all the duties of the Collector under the Bombay Land Revenue Code, 1879.

(ii) the Deputy Commissioners and Assistant Commissioners shall have and exercise all the powers (except the powers of arrest and confinement of a defaulter in a civil jail) and perform all the duties of the Assistant Collector or Deputy Collector under the said Code.

(iii) the Commercial Tax Officers shall have and exercise all the powers (except the powers of arrest and confinement of a defaulter in a civil jail) and perform all the duties of the Mamlatdar under 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 by the respondent No.1 dated 23.1.2018 is one of provisional attachment as provided under Section 45 of the Act, 2003. Section 45 makes it very abundantly clear that during the pendency of any proceedings of assessment or reassessment and turnover, escaping assessment, the Commissioner, with a view to protect the interest of the Government Revenue, may by order in writing, attach provisionally any property belonging to the dealer. Section 45 further clarifies that such provisional attachment would cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1). Section 46 confers special powers to the tax authorities for recovery of the tax as arrears of land revenue.

23. To our understanding, more particularly, having regard to the scheme of the Act, 2003, Section 46 would come into play once the liability is assessed and final order is passed in that regard. For the purpose of effecting recovery of the amount of tax, penalty or interest as may be assessed by the authority, the Special Commissioner, Additional Commissioner and the Joint Commissioners under the Act, 2003 have been conferred with all the powers of the Collector under the Bombay Land Revenue Code. Thus, to put it simply, once the liability of the defaulting dealer is assessed and fixed, the next step would be to recover the requisite amount with penalty or interest. Such amount can be recovered by the authorities under the Act, 2003 by way of land revenue measures as provided under the Bombay Land Revenue Code.

24. From the aforesaid, two things are very amply clear. 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 argument of the learned AGP that the writ applicant would fall within the ambit of the words “other person” as figuring 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.

25. 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.

26. Although, it is not necessary for us to look into and discuss the two judgments referred to and relied upon by Mrs. Pahwa, the learned counsel appearing for the writ applicant, we may refer and look into the same.

27. In Jwelly Tea Co. (supra), a Coordinate Bench of this Court had observed as under:-

8 Another aspect of the matter is that the expression ‘dealer’ has been defined under section 2(10) of the Act to mean 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 for cash or for commission, remuneration or otherwise, which means any person who satisfies the requirement of that sub-section. Sub-section (15) of section 2 of the GVAT Act defines person’ to include an individual, a joint family or Hindu Undivided Family, etc. Therefore, the Act recognises a Hindu Undivided Family as a dealer and as a person. The legislature having treated a Hindu Undivided Family as a taxable entity, distinct from the individual members constituting it, it was not open for the appellant to attach the movable properties of an individual member. In this regard, reference may be made to the decision of the Supreme Court in the case of Kapurchand Shrimal v. Tax Recovery Officer, Hyderabad & Ors., AIR 1969 SC 682, wherein the court has held as under:

5. The scheme of the Income-tax Act, 1961, is to treat the assessee failing to pay the tax due within the period prescribed a defaulter. The Income-tax Officer may, where the assessee is found to be in default, issue a certificate for recovery and forward it to the Tax Recovery Officer specifying the amount of arrears due from the assessee. The amount due may be recovered by resort to any one or more of the four modes prescribed by Sec. 222 of the Act. If the defaulter fails to comply with a notice issued by the 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 entity distinct from the individual members constituting it, and proceedings for assessment and recovery tax having been taken against the Hindu undivided family, it was not open to the Tax Recovery Officer to initiate proceeding against the manager of the Hindu undivided family for his arrest and detention. It is true that if properties of the family, movable and immovable, are to be attached proceedings may be started against the Hindu undivided family and the manager represents the family in proceedings before the Tax Recovery Officer. But by the clearest implication of the statute the assessee alone may be deemed to be in default for non-payment of tax, and liability to arrest and detention on failure to pay the tax due is also incurred by the assessee alone.The manager by virtue of his status is competent to represent the Hindu undivided family, but on that account he cannot for the purpose of Section 222 of the Act of 1961 be deemed to be the assessee when the assessment is made against the Hindu undivided family and certificate for recovery is issued against the family.”

9 Having regard to the principles enunciated in the above decision as well as in the light of the above discussion, this court is of the view that the Tribunal was wholly justified in holding that the property of the individual member of the Hindu Undivided Family could not be attached under section 45 of the GVAT Act. The impugned order passed by the Tribunal does not suffer from any legal infirmity so as to give rise to any question of law, much less a substantial question of law, warranting interference. The appeal, therefore, fails and is accordingly dismissed.

10 It may also be noted that the initial attachment order was for a period of six months. The learned Assistant Government Pleader has stated under instructions that the attachment has not been extended thereafter and hence, the attachment is no longer effective.

28. The last part of the judgment, referred to above, is important. In the present case also, we take notice of the fact that the order of attachment is dated 23.01.2018. Nothing has been shown to us that on expiry of one year, the attachment has been extended thereafter. In substance, the attachment is no longer effective, as on date.

29. The ratio of the decision of this Court in Jwelly Tea 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. Other contentions raised by the learned advocates for the respective parties are not gone into in view of the settled position of law that the dues of the Private Limited Company cannot be recovered from the personal property of the Director in absence of any provisions to that effect in the Sales Tax Act. “

31. Ms. Mehta, the learned AGP laid much emphasis on the words “other person” figuring in Section 46 of the Act, 2003. The words “other person” should be read in context with Section 44 of the Act, 2003. Section 44 provides for the special mode of recovery. Section 44 reads thus:

44. Special mode of recovery:-

(1) Notwithstanding anything contained in any law or contract to the contrary, the Commissioner may, at any time or from time to time, by notice in writing, a copy of which shall be forwarded to the dealer at his last known address, require,–

(a) any person from whom any amount of monies is due, or may become due, to a dealer on whom notice has been served under sub-section (1), or

(b) any person who holds or may subsequently hold monies for or on account of such dealer, to pay to the Commissioner, either forthwith upon the monies becoming due or being held or within the time specified in the notice (but not before the monies becomes due or is held as aforesaid) so much of the monies as is sufficient to pay the amount due by the dealer in respect of the arrears of tax, penalty or interest under this Act, or the whole of the money when it is equal to or less than that amount.

Explanation.– For the purposes of this sub-section, the amount of monies due to a dealer from, or monies held for or on account of a dealer by any person, shall be calculated by the Commissioner after deducting therefrom such claims, if any, lawfully subsisting, as may have fallen due for payment by such dealer to such person.

(2) The Commissioner may amend or revoke any such notice or extend the time for making any payment in pursuance of the notice.

(3) Any 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 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 whose custody there is monies belonging to the dealer for payment of the amount of such monies towards the outstanding amount of tax, interest and penalty payable by the dealer.”

32. In context of section 44, referred to above, the words “other person” means a person from whom any amount of money is due or may become due to a dealer on whom notice has been served under sub-section (1) or any person who holds or may subsequently hold money for or on account of such dealer. The writ applicant herein will not fall within the ambit of the words “other person”.

33. One aspect which needs to be clarified is that only the land belongs to the writ applicant. What has been leased is the open land. The plant and machinery is of the ownership of the respondent No.3. There should not be any difficulty in attaching the plant and machinery of the ownership of the respondent No.3. However, the land of the ownership of the writ applicant could not have been attached.

34. In the same manner, upon such attachment, there could not have been any charge created in favour of the State Government and a revenue entry could not have been mutated in that regard in the record of rights.

35. In the result, this writ application succeeds and is hereby allowed. The impugned orders dated 23.01.2018 passed by the  Commercial Tax Officer, Annexure-A as well as the order dated 14.05.2018 passed by the respondent No.2-Mamlatdar, mutating the entry in the revenue records, is hereby quashed and set aside. The petition is, accordingly, disposed of with the clarification as regards the plant and machinery of the ownership of the respondent No.3.

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