Allowed

P.Santhakumari Amma v. the State of Kerala

Kerala HC14 Mar 2012OP/4179/2002

Case brief

AI extract

What is this about?

The High Court allowed an original petition challenging recovery notices under the Revenue Recovery Act. The court quashed notices issued against a petitioner who had retired from a firm, finding no evidence of proper demand notice service and noting respondents failed to produce mandatory Form 3 required for retirement intimation.

What did the court decide?

Notices Ext.P7 to P9 are set aside. Original petition allowed. No cost. Respondents open to proceed against firm assets.

P.Santhakumari Amma Vs the State of Kerala — Cheque Dishonour | Kerala HC (2012)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON

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WEDNESDAY, THE 14TH DAY OF MARCH 2012/24TH PHALGUNA 1933

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OP.No. 4179 of 2002 (V)

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PETITIONER:

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P.SANTHAKUMARI AMMA, BRINDAVAN GARDENS, KILIKKOLLOOR, KOLLAM.

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BY ADVS.SRI.C.K.THANU PILLAI, SRI.K.SAJI MOHAN, SRI.T.K.SHAIJ RAJ.

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RESPONDENTS:

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1. THE STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT,TAXES DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM-1.

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2. THE ASSISTANT COMMISSIONER(ASSESSMENT)IV COMMERCIAL TAXES SPECIAL CIRCLE, KOLLAM.

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3. THE DISTRICT COLLECTOR, KOLLAM.

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4. THE DEPUTY TAHSILDAR, REVENUE RECOVERY, KOLLAM.

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BY SPL. GOVERNMENT PLEADER (TAXES) SRI. SOJAN JAMES.

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THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 14-03-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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O.P.NO.4179/2002-V:

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APPENDIX

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PETITIONERS' EXHIBITS:

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EXT.P.1:	COPY OF THE PARTNERSHIP DEED DTD. 11/12/1964.
EXT.P.2:	COPY OF THE PARTNERSHIP DEED DTD. 16/10/1966.
EXT.P.3:	COPY OF THE PARTNERSHIP DEED DTD. 16/11/1967.
EXT.P.4:	COPY OF THE PARTNERSHIP DEED DTD. 01/01/1971.
EXT.P.5:	COPY OF THE PARTNERSHIP DEED DTD. 01/01/1976.
EXT.P.6:	COPY OF THE EXTRCT OF FORM “A” ISSUED BY THE REGISTRAR OF FIRMS.
EXT.P.7:	COPY OF THE NOTICE NO.D3-5739/01, 5740/01,5741/01, 5742/01 DTD. 29/11/2001 ISSUED BY THE R.4.
EXT.P.8:	COPY OF THE NOTICE NO.D3-5741/01 DTD. 29/11/2001 ISSUED BY THE R.4.
EXT.P.9:	COPY OF THE NOTICE NO.D3-5740/01 DTD. 29/11/2001 ISSUED BY THE R.4.
EXT.P.10:	COPY OF THE LETTER DTD 14/01/2002 FILED BEFORE THE R.3.
EXT.P.11:	COPY OF THE NOTICE NO. 12010124 DTD. 17/01/2002 ISSUED BY THE R.2.
EXT.P.12:	COPY OF THE ORDER NO.1201 0124/96-97 DTD. 12/02/2001 ISSUED BY THE R.2.
EXT.P.13:	COPY OF THE LETTER DTD. 14/12/2001 FILED BEFORE THE R.2.
EXT.P.14:	COPY OF THE ORDER FN.9378/TVM/CC DTD. 16/05/1983 ISSUED BY THE INCOME TAX OFFICER, CENTRAL CIRCLE, TRIVANDRUM.
EXT.P.15:	COPY OF THE ORDER NO.PAN/46-006-FN-9378/DC (ASST) DTD. 27/03/1992 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX (ASST.), SPECIAL RANGE, TRIVANDRUM.
EXT.P.16:	COPY OF THE IST APPELLATE ORDER DT. 28/11/2002.

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RESPONDENTS' EXHIBIT:

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EXT.R2.A: COPY OF THE STATEMENT REGARDING DETAILS OF ARREARS.

//TRUE COPY//

P.A. TO JUDGE.

Prv.

P.R. RAMACHANDRA MENON, J.

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O.P.No. 4179 of 2002

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Dated this the 14^th day of March, 2012 JUDGMENT

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The petitioner is challenging Ext.P7 to P9 notices issued by the fourth respondent under the relevant provisions of the Revenue Recovery Act, simultaneously challenging Ext.P12 assessment order passed by the second respondent in respect of the assessment year 96-97.

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With regard to the challenge against Ext.P12, it is brought on record, that the petitioner being aggrieved by the said order, had filed an appeal before the concerned Deputy Commissioner and after hearing, the appeal was allowed, whereby Ext.P12 order was set aside. A copy of the appellate order has been produced along with I.A. 13404/06 dated 25.9.06, as Ext.P16. This being the position, no further grievance survives in the writ petition in respect of the 2^nd prayer.

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Coming to the surviving issue i.e., with regard to the prayer in respect of Ext.P7 to P9 notices under the Revenue

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O.P. No. 4179 of 2002 -2-

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Recovery Act, the case of the petitioner is that, she was a partner of the firm by name 'Malabar Cashewnuts and Allied Products', which was constituted in 1964, with the petitioner and one Mr.V.K. Gishnu Nair as partners; while one Mohandas Rajana minor was admitted to the benefits of the firm. Mr. Gishnu Nair was the Managing Partner of the firm and it was being run accordingly, as per Ext.P1 deed. It is brought on record that the

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partnership did undergo several changes/reconstitution by bringing in new partners and retirement of some others. The specific case of the petitioner is that, the petitioner retired from the firm on 16.11.67 and the firm was reconstituted, intimating the position to all concerned in the prescribed manner. There was some further reconstitution as well and the petitioner was sought to be brought in again, as a partner with effect from 1.1.1971 and continued to be so till 1.1.76, when she retired, pursuant to the reconstitution of the firm as per Ext.P5 deed. It is stated that the petitioner had informed the position to the authorities of Income Tax and also to the Registrar of Firms.

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Quite after 1 ½ decades, the petitioner was served with

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O.P. No. 4179 of 2002 -3-

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Exts. P7 to P9 notices under the Revenue Recovery Act demanding a huge sum of Rs.5,19,06,594/-(Rupees five crores nineteen lakhs six thousand five hundred and ninety four) as arrears of Sales Tax under the K.G.S.T Act, plus interest and cost in respect of various assessment years 1986-87, 1987-88, 1989-90 and 1992-93. In fact, the amount covered by Ext.P8 notice pertains to 1989-1990 and the amount in respect of 199293 shown in Ext.P9 stands covered and included in Ext.P7 notice issued under Section 34 and Form 10. Though the petitioner sought to explain the position before the concerned authority, the same did not yield any positive result; which made the petitioner to approach this Court by filing the original petition challenging the proceedings as above.

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When the matter came up for consideration before this Court on 7.2.2002, the following interim order was passed.

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“G.P. Takes notice. G.P. is

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directed to file a counter. It is noted that there is no evidence to show that petitioner intimated that she is ceased to be a director. However, in view of Ext.P5 and averments, the sale of

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O.P. No. 4179 of 2002

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-4-

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personal properties of the petitioner shall be postponed for a period of two months, for enabling the Govt. Pleader to file counter and on further condition that she shall not sell or alienate the properties until further orders from this Court. This will not prevent the Sales Tax authorities from proceeding against the properties of the firm as well as the existing partners, according to law, expeditiously.”

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The interim order of stay was extended from time to time and later, it was extended until further orders, till the disposal of the original petition.

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The second respondent has filed a counter affidavit stating that there is no merit or bona fides in the original petition and that, no document whatsoever has been produced by the petitioner in support of the retirement of the petitioner from the firm with effect from 1.1.1976. It is specifically averred that, no 'Form 3' as contemplated under Rule 5(8)(b) was furnished by the petitioner and as such, the case as now projected in the original petition is not liable to be entertained. The petitioner has

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O.P. No. 4179 of 2002 -5-

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filed reply affidavit rebutting the said submission, also pointing out that there is no dispute for the respondents that they have not received Ext.P5 deed, while they dispute receipt of Form 3 from the petitioner. As a matter of Fact, Ext.P5 reconstitution deed pertains to the person by name 'Gishnu Nair' who was the Managing Partner of the firm (who also retired from the firm with effect from 1.1.1976) and as to the induction of some other

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partners as well. It is also an undisputed fact that the respondents have given effect to the retirement of Gishnu Nair as covered by Ext.P5 and as to the induction of new partners vide Ext.P5, whereas the respondents have turned 'Nelson's eye' to the petitioner which made her to feel aggrieved. It is the further case of the petitioner that no assessment order, or any demand notice to sustain Ext.P7 to P9 was ever served to her before the matter was taken up by way of coercive steps under Ext.P7 to P9. The averment in this regard, as pleaded in 'Ground A' of the original petition, is not seen specifically denied anywhere in the counter affidavit, but for the vague statement that the assessment order was passed and served on the firm. Nowhere

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O.P. No. 4179 of 2002 -6-

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in the counter affidavit, has it been stated, as to when the assessment order was passed in respect of the concerned years or as to when was it served, on whom and how; though, it is pointed out that the liability pertains to different assessment years from 1970-71 to 1996-97.

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With regard to the statutory prescription, the learned counsel for the petitioner submits that there cannot be any dispute, that unless there is an assessment order fixing the liability, no valid recovery can be there. The only assessment order that was served to the petitioner was Ext.P12 and on challenging the same before the appellate authority, it was substantiated point blank, that the petitioner was not a partner of the firm in respect of the concerned year i.e., 96-97 and hence appeal was allowed as per Ext.P6. It appears that the said order has become final, having not been challenged from the part of the revenue.

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It is worthwhile to make a reference to Section 23 of the

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Act in this context, which stipulates that, in respect of liability assessed, demand notice has to be raised on the party concerned

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O.P. No. 4179 of 2002 -7-

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and only if the demand is not satisfied within the time as specified, i.e., 30 days from date of service of the demand, the authority concerned is justified in proceeding with steps under the R.R.Act. Since nothing is stated as to the date of service of demand upon the petitioner (much less anything with regard to the date of passing and service of assessment orders), the contention raised by the petitioner in this regard also stands unrebutted to the said extent.

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Yet another aspect to be considered in this context, is as to the interim order passed by this Court on 18.8.10, which is extracted below:

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“Heard learned counsel on both sides. Respondents 1 and 2 are directed to produce the declaration in form Nos.2 and 3 submitted by Sri V.K. Gishnu Nair, the former Manging Partner of the Firm, Malabar Cashew Nuts and Allied Products, Kollam, along with Ext.P5 partnership deed.”

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In spite of the specific order passed by this Court directing the concerned respondent to produce the 'declaration Form No.2 and 3' submitted by Gishnu Nair (the former Managing Partner of the

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O.P. No. 4179 of 2002 -8-

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firm) along with Ext.P5 partnership deed, the said direction stands still to be complied with and no affidavit whatsoever has been filed by the respondents, if it is not available.

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It has been specifically stated in the reply affidavit filed by the petitioner that, Form No.3 was submitted along with Ext.P5 deed before the second respondent. It is to be noted, 'Form No.3' is just an intimation and no minute factual aspects or

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such other details have to be included therein, as to the business or the relative rights and interests, except as stipulated therein. 'Form No.3' is in the following terms:

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“I/We(have)..... ......of ......(address)......hereby declare that I/We ceased my/our connection with the above business with effect on and from.

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Name of person Amount of nature of previous share in the business

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(1) (2)

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Place: Date: Signature.”

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The learned counsel submits that in view of the nature and

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contents of 'Form 3', it will not be accepted unless and until the same is produced along with the supporting documents i.e.,

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O.P. No. 4179 of 2002 -9-

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Ext.P5 deed. Since there is no case of the respondents that they did not receive Ext.P5 reconstitution deed, it cannot be swallowed without a pinch of salt, when the second respondent contends that 'Form 3' was never submitted by the petitioner in conformity with Rule 5(8)(b).

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The petitioner has got a further contention that the averment in the counter affidavit filed on behalf of the second respondent, that no 'Form 3' was submitted by the petitioner cannot be taken as it is, for the obvious reason that the deponent who has sworn to the affidavit (stated as done on behalf of the second respondent) is not having the custody and competency to do the same. It is pointed out that 'Form 3' is actually available with Ext.P9 in the records of the second respondent (Assistant Commissioner, Assessment ), whereas the counter affidavit filed is by the Assistant Commissioner ( Law ) attached to the office of the Joint Commissioner (Law). This Court, however, does not make any comments in respect of the said averment, for the reason that, it is not necessary to be examined, in view of the observations and finding arrived at already.

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O.P. No. 4179 of 2002

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In the above circumstances, this Court finds that the petitioner is entitled to succeed. It is declared that the respondents are not justified in proceeding against the petitioner, based on Ext.P7 to P9, and the said notices are set aside. Original petition is allowed. No cost. It is made clear that, in view of the interim order passed by this Court on 7.2.2002, it is open for the respondents to proceed against the assets of the 'firm' or that of the others in accordance with law, for realisation of the due amount.

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P.R. RAMACHANDRA MENON, JUDGE.

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Kp/-

P.Santhakumari Amma v. the State of Kerala

Case brief

What is this about?

What did the court decide?

P.Santhakumari Amma v. the State of Kerala

Case brief

What is this about?

What did the court decide?

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