TMI Blog2001 (7) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Andhyarujina for the petitioners in these petitions. Mr. Chandurkar appears for respondents Nos. 1 and 2 and Mr. Deodhar appears for respondents Nos. 3 and 4. All these petitions seek a direction through prayer clause (a) to prohibit respondent No. 1-- Government of India (for the canteen stores department of Ministry of Defence) from withholding the payments of the amounts which are due and which may become due to the petitioners on the basis of the notices issued by the income-tax authorities (respondents Nos. 3 and 4 to these petitions). The petitioners other than the petitioners in Writ Petitions Nos. 1259 of 2001 and 1261 of 2001 are companies with dominant shareholding by Shaw Wallace and Company (for short "SWC"). Thus, in the case of one Pampasar Distillery Limited, 72 per cent. of its shares are held by SWC. One Central Distillery and Breweries Limited, which is one of the petitioners, has 98 per cent of its shares held by SWC. Three other petitioners, viz., Maharashtra Distilleries Limited, Raj Breweries Limited and VRV Breweries and Bottling Industries Limited, have 100 per cent. of their shares held by SWC. All these petitioners supply Indian manufactured foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hyarujina, learned counsel appearing for the petitioners, in Writ Petitions Nos. 1157 of 2001, 1158 of 2001 and 1159 of 2001, relied upon two judgments. Firstly, he relied upon a judgment of the apex court in the case of ITO v. Budha Pictures [1967] 65 ITR 620. He submitted that as held by the apex court with respect to the provisions of the Indian Income-tax Act, 1922 (as it was in operation at that time) there has to be a relationship of debtor and creditor between the third party and the assessee. Unless that relationship is available, a garnishee order cannot be passed with respect to the amount due to such a third party. Then he relied upon a judgment of the learned single judge of this court in the case of McDermott International Inc. (No. 2) v. Union of India [1988] 173 ITR 164. In that matter, the court held that a plain reading of section 226(3), suggests that before any notice can be issued under section 226(3) the assessee must be in default in payment of tax. In the instant case, he submitted that whether Shaw Wallace and Co., is in default or not, no notice of demand can be served on the present petitioners and the order or stoppage of payment by the first respondent w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or obtaining orders, excise permits, etc., either from SWC godown (referred to as 'godowns') from parties to whom the IMFL products are to be sold directly..." The agreement thereafter states "Shaw Wallace will be responsible to and shall arrange for the collection of the sale proceeds and declaration forms required for sales tax and other statutory enactments and regulations on such sales made to SWC godown or direct indenters." Mr. Deodhar, therefore, submits that all these supplies made by the present petitioners were on behalf of Shaw Wallace and Company. It is, therefore, that when the Tax Recovery Officer sent the garnishee notice to respondent No. 1, there was nothing wrong on the part of respondent No. 1 in stopping the payments to the petitioners. Respondent No. 1 was bound by the mandate of the particular provision of law and direction given by respondent No. 4 and it had to forward those payments to the Tax Recovery Officer on account of the default made by Shaw Wallace and Company. In our view, there is much force in the submissions advanced by Mr. Deodhar. There can be no quarrel with the authorities relied upon by the petitioners. However, in the facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, states that in case the court so directs, the Assessing Officer will hear the objections if filed by the petitioners and thereafter pass appropriate order with respect to the notice issued by him. Mr. Tulzapurkar and Mr, Andhyarujina, on the other hand, submit that under the statute, as it stands, it provides for respondent No. 1 to raise these objections and they are not likely to object. They submit that under this section the present petitioners have no forum nor are they provided with an access to the Assessing Officer in such proceedings. Here, we are concerned with situation where respondent No. 1 has stopped making payments to the petitioners. Those amounts, according to the petitioners, are due to them for the supplies made and that the amounts are being wrongfully withheld. It is pointed out on behalf of respondent No. 4 that prima facie the supplies concerned were made by and on behalf of Shaw Wallace and Company and, therefore, all such payments on account of these sup plies are now stopped by respondent No. 1. In our view, there is nothing wrong on the part of respondent No. 1 in stopping these payments because respondent No. 1 is duty bound to obey the notic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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