TMI Blog2013 (1) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... r. As decided in Vandana Bidyut Chaterjee (2012 (4) TMI 42 - BOMBAY HIGH COURT), there is no provision in the Customs Act 1962 similar to Section 179 of the Income Tax Act 1971 or Section 18 of the Central Sales Tax Act 1956 where the dues of a private limited company can be recovered from its directors. Whether the Petitioner is in breach of any of the provisions of the Income Tax Act 1961 is not an issue which falls for determination in these proceedings. Thus concluded that the action of the Revenue in seeking to issue a notice of demand dated 1 November 2011 upon the Petitioner and the levy of attachment to the extent of the interest of the Petitioner in flat 1501B are unlawful and would have to be set aside. - Writ Petition No. 2347 of 2011, Writ Petition No. 2586 of 2011 - - - Dated:- 10-1-2013 - Dr D.Y. Chandrachud And A.S. Sayed, JJ. Appellant Rep. by : Mr. Mayur Khandeparkar with Jamshed Ansari Respondent Rep. by : Mr. Jitendra B. Mishra JUDGEMENT Per : Dr D.Y. Chandrachud, J : Rule, by consent made returnable forthwith. Counsel appearing on behalf of the Respondents waives service on behalf of the Respondents. By consent, both the Petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assistant Commissioner of Customs, Drawback Recovery Cell under Section 142 (1)(c)(ii) of the Customs Act 1962 read with Rule 6 of the Customs (Attachment of Property of Defaulters for Recovery of Customs Dues) Rules 1995 specifying that the amount was to be recovered from the Petitioner. The Petitioner has sought to challenge the notice of demand as being without jurisdiction. 5. In the companion petition the Petitioner has sought to challenge a similar demand notice dated 1 November 2011 addressed to her on the basis of the order of adjudication passed against Nisum Global Limited in the amount of Rs.96.07 lacs. It has been stated that the Assistant Commissioner of Customs, Drawback Recovery Cell has forwarded the certificate to his counter part in the Special Recovery Cell under Section 142 (1)(c)(ii) read with Rule 6. Following the notice of demand, a notice of attachment has been levied both upon the Petitioner and her spouse Nirmal Agarwal. The notice of attachment has been addressed to the Petitioner and her spouse as directors of Nisum Exports and Finance Private Limited and as also in the name of Mehul Exports and Nisum Global Limited. The attachment has been challenged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issued to the aforesaid firms / companies and their directors under Section 142 of the Customs Act 1962. The Petitioner is stated to be one of the directors of the two companies whereas it is an admitted position that Mehul Exports is a proprietary concern of her spouse. The affidavit states that the property which was attached by the Revenue is a joint ownership property in the joint names of the Petitioner / her spouse and one Rahul G. Chokhani. The property, comprising of flat 1501 is stated to have been divided into three portions : 1501A, 1501B and 1501C, each of which have been registered individually and separately in the names of the aforesaid three persons. The Revenue has attached the two properties which are stated to be registered in the name of the Petitioner and her spouse. The Petitioner claims to be the owner of flat 1501B situated at Oberoi Sky Heights, Lokhandwala, Andheri (West), Mumbai 400 053. A further affidavit has been filed on 25 June 2012 by the Assistant Commissioner in which it is sought to be stated that flat No.1501 is a single flat for all practical purposes though registered separately by assigning three different numbers viz. 1501A, 1501B and 1501 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recover the amount so payable by detaining and selling any goods belonging to such person. The expression such person in clauses (a) and (b) of sub-section (1) of Section 142 evidently means the person by whom any sum is payable under the Act. Clause (c ) of sub-section (1) provides for the recovery of the amount due from such person in the event that it cannot be recovered under clauses (a) and (b). Under sub-clause (i) of clause (c ) the Assistant or Deputy Commissioner has to prepare a certificate specifying the amount due from such person and to remit it to the Collector of the district where such person owns any property or resides or carries on business. Thereupon the Collector has to recover the amounts specified in the certificate as an arrear of land revenue. Under sub-clause (ii) of clause (c ) the proper officer is empowered on an authorization by the Commissioner and in accordance with the rules to distrain any movable or immovable property belonging to such person and to cause it to be sold if the amount remains unpaid for a period of thirty days. The relevant part of Section 142(1)(c) provides as follows : (c) if the amount cannot be recovered from such pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the Certificate within seven days from the date of the service of the notice and intimate that in default, such subordinate officer is authorised to take steps to realise the amount mentioned in the Certificate in terms of these rules. 5. Attachment of property. - If the amount mentioned in the notice issued in terms of the preceding rule is not paid within seven days from the date of service of this notice, the Proper officer may proceed to realise the amount by attachment and sale of defaulter's property. For this purpose, the proper officer may detain the defaulter's property until the amount mentioned in the Certificate together with the cost of detention is paid by the defaulter. 11. Rule 3 requires the issuance of a certificate by the Assistant or Deputy Commissioner of Customs where government dues are not paid by the defaulter, specifying the amount due from such person. Under Rule (4) on receipt of the certificate, the Commissioner can authorize an officer to serve a show cause notice upon the defaulter requiring him to pay the amount within seven days. Under Rule 5 if the amount specified in the notice is not paid within the period stipulated the proper offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If in a given case, it is the contention of the Revenue that the entity of a corporate body is a mere shell which is being utilized to defraud the Revenue, a case for lifting the corporate veil has to be made out when notices of demand are issued to the company by making the directors / shareholders liable to pay the dues. In the present case, no such exercise was carried out and as we have noted neither was a notice to show cause under Section 124 issued to the Petitioner nor was an order of adjudication passed against her. The certificate that was issued under Section 142(1)(c)(ii) was not issued to the Petitioner. Hence, the action of addressing a demand to the Petitioner on 1 November 2011 under Section 142(1)(c)(ii) read with Rule 6 of the Attachment Rules and the consequential attachment are wholly without the authority of law. 14. The affidavits which have been filed on behalf of the Revenue proceed on the basis that flat 1501 is a composite flat which has been bifurcated into 1501A, 1501B and 1501C respectively. The Petitioner has annexed to a rejoinder dated 18 June 2012 a copy of the registered agreement dated 8 March 2004 under which the flat bearing No.1501B was purc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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