Case Law Details
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.
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