K. Srihari Rao and Co. vs Deputy Commercial Tax Officer Sirpur, Kaghaznagar and Another

Yogeshwar Dayal, C.J. and Upendralal Waghray, J.—Heard.

M/s. Srihari Rao and Company, a partnership firm represented by Sri K. Srihari Rao, have filed this writ petition against (i) the Deputy Commercial Tax Officer, Sirpur, Kaghaznagar; and (ii) the Sirpur Paper Mills Limited, Sirpur, Kaghaznagar, being aggrieved by the impugned Proceedings No. 12703/88-89 dated 23 March, 1989, issued by the first respondents and received by the second respondent, inasmuch as the same affect the writ petitioners.

It will be noticed that there are no arrears of sales tax due from the writ petitioners. Some money for some commercial transaction between the Sirpur Paper Mills Limited and the writ petitioners is allegedly due to the writ petitioners. It is mentioned in the impugned proceedings that there is an account of Sri K. Srihari Rao, one of the partners of M/s. Jagresree Mines and Minerals, with second respondent, and the second respondent is directed thereunder not to pay an amount of Rs. 87,246 to Sri K. Srihari Rao or to any person authorised by M/s. Jagresree Mines and Minerals.

It will be noticed that K. Srihari Rao & Company is not a defaulter. The defaulter is alleged to be M/s. Jagresree Mines and Minerals of which one Sri K. Srihari Rao is a partner.

Power is sought to be exercised by the first respondent u/s 17 of the Andhra Pradesh General Sales Tax Act, 1957. Section 17 of the Act reads as follows :

"17. Recovery of tax and other dues payable under the Act from persons from whom money is due to the dealer - (1) The assessing authority, may at any time or from to time, by notice in writing (a copy of which shall be forwarded to the dealer at his last address known to the assessing authority) require any person from whom money is due or may become due to the dealer, or any person who holds or may subsequently hold money for, or on account of the dealer, to pay to the assessing authority either forthwith if the money has become due or is so held, or within the time specified in the notice (but not before the money becomes due or is held), so much of the money as is sufficient to pay the amount due by the dealer in respect of arrears of tax, interest, penalty or fee or the whole of the money when it is equal to or less than than amount.

(2) The assessing authority may, at any time, or from time to time, amend or revoke any such notice or extend the time of making any payment in pursuance of the notice.

(3) Any person making any payment in compliance with a notice under this section shall be deemed to have made the payment under the authority of the dealer and the receipt of the assessing authority shall constitute a good and sufficient discharge of the liability of such person to the extent of the amount referred to in the receipt.

(4) Any person discharge any liability to the dealer after receipt of the notice referred to in this section, shall be personally liable to the assessing authority to the extent of the liability discharged or to the extent of the liability of the dealer for the amount due under this Act, whichever is less.

(5) Where any person to whom a notice under this section is sent proves to the satisfaction of the assessing authority that the sum demanded or any part thereof is not due by him to the dealer, or that he does not hold any money for or on account of the dealer, then nothing contained in this section shall be deemed to require such person to pay the sum demanded or any pert thereof, to the assessing authority.

(5-A) Where any person to whom a notice under sub-section (1) is sent, fails to pay to the assessing authority the sum demanded or any part thereof as required in the said notice, such sum shall be recoverable from such person as if it were an arrear of land revenue due from him.

(6) The provisions of this section be without prejudice to any action that may be taken for the recovery of the money due from the assessee."

It will be noticed that money that is due to the writ petitioners is due from the second respondent. The writ petitioner is not a defaulter. Therefore, no order u/s 17 of the Act could have been issued to the Sirpur Paper Mills Limited for attaching any amount that might be payable to the writ petitioner.

It appears that some tax is due from M/s. Jagresree Mines and Minerals of which Sri K. Srihari Rao is said to be proprietor/partner. u/s 17 of the Act, the amount in question cannot be recovered because Sri K. Srihari Rao & Company is not a defaulter. If under general law, the Deputy Commercial Tax Officer, Kaghaznagar, has any right to recover dues of M/s. Jagresree Mines and Minerals from any of their partners, then we are concerned. Since the impugned proceedings, purported to have been issued in exercise of statutory powers, affect the writ petitioner, we are constrained to quash the same. However, it is made clear that, if the Deputy Commercial Tax Officer has any other right in law to recover the amount from any of the partners/proprietor of M/s. Jagresree Mines and Minerals, he is free to do so according to law.

It will be noticed also that the writ petitioner came to know of the impugned proceedings dated 23rd March, 1989, in view of the communication of letter S. Tax/9795 dated 24th March, 1989, by the Sirpur Paper Mills Limited to the writ petitioner. Further, it is the case of the writ petitioner and the Sirpur Paper Mills Limited that they have no independent account of Sri K. Srihari Rao, partner of M/s. jagresree Mines and Minerals, with them.

Therefore, the impugned proceedings dated 23rd March, 1989, issued by the Deputy Commercial Tax Officer, Kaghaznagar, are quashed and the writ petition is allowed. No costs.

Advocate''s fee Rs. 150.

Writ petition allowed.