Heard Mr. R.Gandhi, the learned Senior Counsel appearing for M/s. S.N.Kirubanandam, the learned counsel for the petitioner and Mr.K.Venkatesh, the learned Government Advocate for the respondent.
2. The petitioner is aggrieved by the demand notice issued by the respondent, calling upon him to pay a sum of Rs.3,73,58,556/-, being the arrears of tax and penalty, payable by the dealer, M/s. S.S. Metals, No.14, E.K. Agraharam, Chennai-600 003, under the provisions of the Tamil Nadu General Sales Tax Act, 1959 for the assessment years 1990-1991 and 1991-1992.
3. The petitioner's case is that, he was inducted as a Partner, when he was aged about 12 years, a minor, represented by his father and natural guardian, and the percentage of share allotted to the then minor was only 5%. Subsequently, the petitioner, represented by his father, executed a Deed of Release, dated 01.04.1990, in favour of other existing Partner, Mr.Malam Singh, releasing 5% share in his favour. Thus, the Partnership Firm on and from 01.04.1990, became a Proprietorship Concern. Therefore, it is submitted if at all, the respondent has to recover any arrears of sales tax, then, the respondent should proceed against the dealer, or, in other words, the Proprietor, who owns the said Concern. The petitioner would seek to substantiate his stand by referring to the Release Deed; orders of assessment passed by the respondent for the year 1989-1990 and 1990-1991 respectively, to show that the Partnership Firm had filed its return for the assessment year 1989-1990, wherein, Mr. Malam Singh has been described as a Partner, and, in the assessment order for the year 1990-1991, he has been described as a Proprietor.
4. Further, it is submitted that, action was initiated against the petitioner's mother Mrs.Pawn Bai, by issuing a notice, dated 04.04.1994. Challenging the said notice, the petitioner's mother a filed a Writ Petition before this Court, in W.P.No.7483 of 1994. After the constitution of the Tamil Nadu Taxation Special Tribunal, Chennai, the said Writ Petition was transferred to the Special Tribunal, and re-numbered as T.P.No.2048 of 1997, and the Special Tribunal set aside the notice with the following finding:-
The claim of the petitioner that she was the absolute owner of the property bearing Door No.14, Ekambareeswarar, Agraharam, by virtue of sale of deed, dated 14.07.1988, has not been disputed by the respondents. The fact remains that the minor son of the petitioner was a partner in a firm run in the name and style of M/s. S.S.Metals. Assuming that the minor son was liable to pay any arrears of sales tax, it can be recovered only from the assets of the minor. The mother viz., the petitioner herein is not liable to pay any arrears of sales tax of her minor son. Hence, this petition is allowed and the order of attachment dated 04.04.1994 stands set aside.
5. Subsequently, the respondent issued a notice in the name of the dealer, i.e., M/s. S.S.Metal dealers, with a copy marked to the father of the petitioner. In the said notice, there is an averment, stating that, the Release Deed is a fictitious and bogus document, and created only for the purpose of exonerating the petitioner from paying the arrears of sales tax payable to the Department. Further, by referring to Rule 44 of the Tamil Nadu General Sales Tax Act, 1959, it was stated that, in case, any guardian of any minor is carrying on business on behalf of and for the benefit of such minor, the tax levied, shall be leviable upon and recoverable from such guardian. Accordingly, the property situated at No.2, Kesava Iyer Street, Chennai-3 was attached.
6. The petitioner's father, Mr.J Dhanaraj C.Shah, challenged the said notice, dated 14.03.2000, before the Tamil Nadu Taxation Special Tribunal, Chennai in O.P.No.478 of 2000. The Special Tribunal, after considering the dispute raised by the petitioner's father, held that the dispute regarding the genuinenity of the Release Deed cannot be entertained or adjudicated by the Special Tribunal, and held that the petitioner is entitled to initiate proper proceedings to establish the truth of retirement. Immediately, the petitioner filed an Original Suit, in O.S.No.6259 of 2001 before the City Civil Court, Chennai, for a declaration that, he is not a partner of M/s.S.S.Metals from 01.04.1990 and for a decree of permanent injunction against the second defendant viz., the respondent herein from in any way proceeding against the petitioner/plaintiff to collect the arrears of M/s. S.S.Metals. It is pertinent to mention here that, at the time, when the petitioner approached the Civil Court, he had attained majority. The Civil Court, by a Judgment and Decree in O.S.No.6259 of 2001 dated 23.02.2005, decreed the suit insofar as the declaratory relief is concerned, and it appears to have rejected the relief of permanent injunction, as the Department was entitled to recover the sales tax arrears from the registered dealer. Thus, as directed by the Special Tribunal, the petitioner had approached the Civil Court and obtained a decree of declaration that, he is not a partner on or from 01.04.1990. Though the respondent was the second defendant in the suit, it appears that the respondent/second defendant did not file Appeal, challenging the Judgment and Decree of the Trial Court, in O.S.No.6259 of 2001 and allowed the same to attain finality.
7.As pointed out by the Special Tribunal, in O.P.No.478 of 2000, dated 26.04.2000, genuineness of the retirement deed had to be adjudicated before a Civil Court, which has been done, and the petitioner has come out successful. Therefore, the said decision would bind the respondent herein, who was the second defendant in the suit. That apart, even while deciding the correctness of the notice issued in favour of the petitioner's mother Mrs.Pawn Bai, the Special Tribunal in T.P.No.2048 of 1997, stated the position of law by observing that, the minor son if found liable to pay any arrears of sales tax, and it can be recovered from the assets of the minor, and the mother is not liable to pay any arrears of sales tax of her minor son. This principle will equally apply to the petitioner's father, Mr. J. Dhanaraj C. Shah, who was the natural guardian, when the petitioner was inducted as a Partner, and subsequently, when Deed of Release was executed on 01.04.1990. Therefore, even if the petitioner had not obtained a decree from the Civil Court, the respondent could not proceed against the petitioner's father for the alleged sales tax due payable by the petitioner. In any event, the respondent cannot proceed against the petitioner, since the petitioner had succeeded before the Civil Court and obtained decree, which is ruled in favour of the petitioner, and held that the petitioner is not a Partner of M/s.S.S.Metals on and from 01.04.1990.
8. Thus, without noting all these factors, the respondent has issued the impugned notice, which is bereft of particulars, and there seems to be a change of Officer, who was unaware of what has happened earlier and issued the impugned notice.
9. Therefore, in the light of the above discussions, the impugned notice is held to be unenforceable against the petitioner. Accordingly, the Writ Petition is allowed and the impugned notice is quashed as against the petitioner alone. It is made clear that, this order will not prevent the respondent from initiating recovery proceedings against the registered dealer, M/s. S.S.Metals. No costs. Consequently, connected Miscellaneous Petitions are closed.
23.11.2017 msm/sd Index:Yes/No To The Commercial Tax Officer, Moore Market Asst. Circle, Chennai-1.
T.S.Sivagnanam, J., msm/sd W.P.No.33581 of 2005 23.11.2017