TMI Blog1974 (1) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... the business there at Umarkote "in his own name". The Sales Tax Officer assessed the firm M/s. Hunsraj Brothers (hereinafter described as transferor-firm) towards the end of 1964. Again in 1966 it was reopened under section 12(8) of the Act by the Intelligence Circle, Berhampur, for the quarters ending 30th September, 1961, to 31st March, 1963. As admitted in the petition notices were issued to the petitioner treating him as successor-in-interest of the transferor-firm, though, in fact, he had not purchased the entire ownership of the business of the transferor-firm and as such was not the "transferee of business" within the meaning of section 19(1) of the Act. It is on this ground that the petitioner did not accept the notice, even though residing at Umarkote, and also did not think it necessary to contest the assessment proceeding. In the result the regular assessment proceeded ex parte and a sum of Rs. 17,526.61 was fixed as the total amount of tax and penalty against the transferor-firm. Assessment orders and demand notices standing in the name of the transferor-firm were sought to be served on the petitioner as "successor-in-interest of M/s. Hunsraj Brothers", but he d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn Division, Orissa, Berhampur, who by his order dated 21st May, 1971, rejected the revisions-vide annexure 3 to the petitions. Thereafter the petitioner, apprehending attachment of his property at Umarkote, filed the present petitions on 5th July, 1971, impleading the Revenue Divisional Commissioner, Southern Division, Orissa, the Certificate Officer and the State of Orissa as opposite parties 1, 2 and 3 respectively, with the twofold prayer as aforesaid, on the ground that (i) the petitioner is not the transferee as envisaged under section 19(1) of the Act to incur the liability and (ii) recovery of the dues under the Act as an arrear of land revenue with the aid of the O.P.D.R. Act as provided under section 13(7) of the Act, offends against the fundamental right of a citizen guaranteeing equality before the law inasmuch as there is no guideline when the authorities will take recourse to civil suit and when to the O.P.D.R. Act-the provisions of the latter being more onerous and stringent than that of the former. Thus it affords ample scope for the play of one's fancy which might result in naked discrimination. 5.. In the counter-affidavit filed by the opposite parties the all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ex parte and the orders of assessment quantifying the tax payable by it were passed on 26th November, 1966. Thereafter notices of demand and the copies of assessment orders were sent to the transferor-firm by post but they were returned unserved as the addressee was not found in Umarkote. The notices were then sent for service through the Inspector of Sales Tax, who served the same by affixture in the presence of witnesses on the last place of business as required under the Rules. Yet tax dues were not paid within the due date. So a notice to show cause as to why penalty should not be levied under section 13(5) was issued to the transferor-firm. As the same also could not be served, the matter was sent for enquiry to the Inspector of Sales Tax. He reported that the entire business of the transferor-firm had been transferred to the petitioner. Accordingly, letters were issued to the petitioner indicating that as the transferee of the entire business, he is liable to pay the tax and penalty quantified and imposed on the transferor and unless the tax and penalty were paid within a particular time, as indicated in the letters, maximum penalty under section 13(5) would be levied and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use Government have a free choice of remedies. Moreover, the procedure provided under the O.P.D.R. Act cannot be said to be more onerous or prejudicial than the civil suit inasmuch as the O.P.D.R. Act makes equally elaborate procedure with proper safeguards like that under the Code of Civil Procedure for execution of decrees. Further the orders in the certificate proceedings can be questioned in a civil suit as provided under Chapter IV of the O.P.D.R. Act and that the P.D.R. Act itself makes provisions for appeal, revision and review which excludes the apprehension of any arbitrary exercise of powers. The matter was before a Division Bench of this Court, but since challenging the constitutionality of section 13(7) of the Act is a res of great public importance over which there is no direct decision, it has been referred to a larger Bench and that is how it is before us. 6.. Mr. S.B. Nanda, the learned counsel for the petitioner raised the following contentions: (i) Section 19(1) of the Act fixes on the transferee only the liability to pay the tax but does not suggest the mode of recovery of the same. Section 13(7) of the Act does not apply to transferees. The mode of recovery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s belated stage. 8.. From the rival contentions the points that emerge for consideration are: (I) Is the petitioner liable to pay the entire assessment dues-including the tax, penalty and interest of the transferor-firm? (II) Are there two modes of recovery of such dues, one by certificate proceedings under the P.D.R. Act and the other by a civil suit? If so, is the one provided under the P.D.R. Act more onerous and, as such, violative of article 14 of the Constitution? (III) Should the reliefs sought for in the petitions be turned down on the ground of delay? 9.. Point No. I.-This has two facets-one factual and the other legal. Much turns out on the factual aspect and so we proceed to decide the same first, which, however, will not detain us much. It is averred in the petition that the petitioner "has only purchased a few stock of the transferor-firm but not its entire business". This has been specifically denied in the counter and in support thereof the statements of the petitioner and his partner on solemn affirmation (annexures A and B) have been filed. A reading of those two annexures leaves no room for doubt that the petitioner purchased the "entire business" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... becomes liable for the tax due on the transferor till the date of transfer. The purpose of the legislature in engrafting this section is obvious, namely, to saddle the transferee of an entire business with the liability to pay the unpaid tax due on the transferor, without prejudice to any action that may be taken for its recovery from the transferor. Thus the arrear tax dues can be realised from either, as if the transferor and the transferee are two co-defaulters. Without such a provision there is enough scope for tax evasion on fake grounds of transfer of business, an eventuality which the provisions of the section are calculated to meet. This issue came directly for decision by a Division Bench of this Court in the case of Patnaik Co. (P.) Ltd. v. Commissioner of Sales Tax[1963] 14 S.T.C. 738. In that case this court has held that "by virtue of the legal fiction created by section 19 of the Orissa Sales Tax Act, 1947, a transferee of a business is treated as a registered dealer. He therefore comes within the definition of 'dealer' in section 2(c) to whom the various provisions of the Act, including the mode of recovery of tax, would apply". There exactly the same contention, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated under sub-section (1) of section 19 also includes penalty and interest. This question is no more ambulatory. Their Lordships of the Supreme Court in the case of C.A. Abraham v. Income-tax Officer, Kottayam[1961] 41 I.T.R. 425 (S.C.); A.I.R. 1961 S.C. 609., held that: "In interpreting a fiscal statute, the court cannot proceed to make good deficiencies if there be any: the court must interpret the statute as it stands and in case of doubt in a manner favourable to the taxpayer. But where by the use of words capable of comprehensive import, provision is made for imposing liability for penalty upon taxpayers guilty of fraud, gross negligence or contumacious conduct, an assumption that the words were used in a restricted sense so as to defeat the avowed object of the legislature qua a certain class will not be lightly made. Section 44 sets up a machinery for assessing the tax liability of firms which have discontinued their business and provides for three consequences, (1) that on the discontinuance of the business of a firm, every person who was at the time of its discontinuance a partner is liable in respect of income, profits and gains of the firm to be assessed jointly and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y power to realise the tax by taking recourse to any other method than sending a requisition for realisation as arrears of land revenue. The Act does not envisage anywhere that the Commissioner can realise the amount by filing a civil suit. Thus, there is no basis for the argument that the same authority under the Act has got two modes open for recovery of the tax and so, it can pick and choose and take recourse to the more rigorous method in cases of some assessees while leaving the rest and thus exercise hostile discrimination. In view of this specific provision in the Act and absence of any indication anywhere that the Commissioner can also take recourse to the civil court by filing a suit for realisation of tax not paid, we find such an argument is not only presumptive but baseless. Section 22 of the Act specifically says how certain proceedings are barred and the assessee cannot challenge any assessment in any other forum except what is provided under the Act. By necessary implication it prohibits the civil court to entertain any suit challenging the validity of any assessment. Section 22 runs thus: "22. Bar to certain proceedings.-Save as is provided in section 24 no asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the O.P.D.R. Act is more onerous than the one provided under the C.P.C. As indicated earlier the Act being a self-contained one it makes provision for the manner of realisation or recovery of the dues and that is with the aid of the O.P.D.R. Act. It does not say that it will be realised with the help of the civil court under the provisions of the C.P.C. Therefore, the contention advanced on behalf of the petitioner that section 13(7) of the Act that provides for realisation of the dues with the aid of the O.P.D.R. Act is more onerous than the one under the general law under the C.P.C. does not arise at all, for no two modes are contemplated under the Act. The Act contemplates only one method and that is with the aid of the P.D.R. Act. Therefore, any comparison between the provisions of the O.P.D.R. Act and of the C.P.C. do not at all arise and such an argument is without any foundation. The assessment being final the only question is the mode of recovery. We fail to understand, how for recovery of the amount when there is a provision under the Act itself, Government (not the Commissioner) would advisedly run to a civil court for realising that amount. Further, the contention t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t out anything substantial to show how the provisions of the C.P.C. are more liberal than the provisions of the P.D.R. Act. All that he could urge was that in the case of a civil suit court-fee is paid, it is tried by a judicial officer, and that it is not of a summary nature. Hardly those are valid grounds to justify striking down any provision as discriminatory and violative of article 14 of the Constitution. The Act gives power to the Commissioner under section 13(7) only for recovery of the dues with the aid of the P.D.R. Act and not under the C.P.C. The provisions of the Act therefore do not lead to the result that a more harsh and drastic remedy has been applied against the petitioner who is proceeded against for the recovery of the dues under the provisions of the P.D.R. Act. The P.D.R. Act affords sufficient checks and balances preventing arbitrary exercise of power. Accordingly, this second point is also answered against the petitioner. 11.. Point No. III.-It was contended by the learned standing counsel for the department that apart from any other consideration the petition should be rejected in limine because of undue delay in seeking the extraordinary jurisdiction o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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