Case: Periyar &amp; Pareekanni Rubbers Ltd Vs. State Of Kerala

that certain income has been received during the relevant assessment year but it is not clear who has received that income and prima facie it appears that the income may have been received either by A or B or by both together, it would be open to the relevant income-tax authorities to determine the said question by taking appropriate proceedings both against A and B. That being so, we do not think that Mr. Nambiar would be justified in resisting the enquiry which is proposed to be held by respondent No.1 in pursuance of the impugned notice issued by him against the appellant." 22. Such a procedure in this case was also followed. Such a direction has been issued, whereupon the assessment orders have been passed. We at this stage, therefore, cannot direct the authority to reopen the proceedings once again, as was urged by the learned counsel. 23. Reliance was also placed on the Commissioner of Income-tax, Madhya Pradesh, Nagpur vs. M/s. Hukam Chand Mohanlal : AIR 1971 SC 2591 wherein it was held :- "The assessee, in the present case, does not fall within any of those clauses. There is no specific provision in the Act under which it can be said that the assessee is a person by whom income tax is payable on the amount of Rs. 24,341/-which came to her by way of remission on account of what had transpired in the lifetime of her husband. The Act does not contain any provision making a successor in business or the legal representative of an assessee to whom an allowance has already been granted liable to tax under Section 41 (1) in respect of the amount remitted and received by the successor or the legal representative." 24. We have noticed hereinbefore that a finding of fact has been arrived at that for all intent and purport the appellant was the agent of ‘the lessee. Furthermore, a distinction must be borne in mind between the provisions of the Income Tax Act and Sales Tax Act. Sales tax is leviable on a sale. The manufacturer of the liquor is an assessee. It is a dealer within the meaning of the said Act. For the purpose of realisation of the sales tax, one who manages the business may not come to the front. Applying the doctrine of Crown Debt the assets of the unit could be attached or sold therefor. Crown Debt, as is well known, unless there is a statutory interdict, prevails over all other debts. It is based on the principle that public interest prevail over the private individual. [See Halsburys Laws of England Fourth Edition Volume 8 paras 1076 at pg. 666-667]. 25. We have referred to the doctrine of Crown Debt not for its applicability directly but to emphasise its importance in common law. A statute, particularly a fiscal one, must be construed in such a manner so as to give effect thereto. Evasion of tax is looked down upon under our constitutional and statutory schemes. 26. Reliance has also been placed on Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam vs. Gopal Trading Company [84 (1992) STC 294], wherein this Court, in a case involving the question as to whether despite establishing the fact that the purchaser of the goods at the relevant time had a valid certificate of registration and that he in fact had purchased the goods, whether the assessing authority must accept the form 25 declaration issued by him and make the assessment accordingly, opined that a fresh opportunity must be given to the assessee. 27. If the finding of fact arrived at by the Tribunal as affirmed by the High Court is correct, we would not take recourse to a construction which will defeat the purport and object of the Act.28. Tax liability of the business concern is not in dispute. Correctness of the orders of assessment is also not under challenge. The Tribunal or for that matter the High Court were, therefore, not concerned with the liability fastened upon the dealer. The only question was as to what extent the appellant was liable therefor. It is impossible for the legislature to envisage all situations. Recourse to statutory interpretations therefor should be done in such a manner so as to give effect to the object and purport thereof. Doctrine of purposive construction should, for the said purpose, be taken recourse to. {See New India Assurance Company Ltd. v. Nusli Neville Wadia and Anr. [JT 2008 (1) SC 31 ] 29. Ordinarily, we would have accepted the contention that prior to coming into force of Section 19C of the Act, there did not exist any provision in the Act to assess two persons by fastening joint and several liability. However, the superior courts and, in particular, this Court, would not come on the way of the revenue to recover arrears of tax, if it is otherwise permissible in law.30. Apart from the finding of fact arrived at by the Tribunal, the appellant upon resumption of tenancy would become liable to pay tax, if it intends to carry on its business.31. The Act provides for the mode and manner in which the revenue may be recovered. The property of the dealer, namely, one in whose name the registration stood, can be proceeded with. Its properties may be subjected to attachment and sale.32. In that view of the matter, it is not a case where, this Court, while exercising its jurisdiction under Article 136 of the Constitution of India should interfere with the impugned judgment.33. In State of Karnataka and another vs. Shreyas Papers Pvt. Ltd. and others [(2006) 1 SCC 615] , this Court held that since there is a transfer of ownership of properties of the transferee, as noticed in terms of Section 100 of the Transfer of Property Act, the charged property may be sold.34. We may observe that in law the appellant is liable to pay the amount of sales tax assessed by the assessing authority.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]19. Management of business may be handed over by the owner to another but the department must be made known thereabout. A fresh registration certificate must be applied for and granted. The business by the Lessee continued under the old name. It was done at the behest of the appellant. It, therefore, cannot now turn around and contend that it was not liable to pay any tax.20. It may be true that Section 19C of the Act having come into effect from 29th August, 1989, could not be given any retrospective effect but then the legislature was not presumed to take into consideration a situation of the present nature. It is presumably for the said reason, the High Court evolved such a procedure which was acceptable to all the parties. Pursuant to or in furtherance of the direction of the High Court also, notices were issued. Appellant submitted itself to the jurisdiction of the assessing authority. Its liability was held to be joint and several with that of ‘the lessee. It preferred an appeal there against but it did not implead ‘the lessee as a party therein. In absence of ‘the lessee as a party to the said appeal, it was impermissible for the appellate authority to hold ‘the lessee alone liable for payment of tax. Even the Tribunal and the High Court could not have, in the said fact situation, issued any direction as to how the arrears of tax should be recovered.Such a procedure in this case was also followed. Such a direction has been issued, whereupon the assessment orders have been passed. We at this stage, therefore, cannot direct the authority to reopen the proceedings once again, as was urged by the learned counsel.We have noticed hereinbefore that a finding of fact has been arrived at that for all intent and purport the appellant was the agent of ‘the lessee. Furthermore, a distinction must be borne in mind between the provisions of the Income Tax Act and Sales Tax Act. Sales tax is leviable on a sale. The manufacturer of the liquor is an assessee. It is a dealer within the meaning of the said Act. For the purpose of realisation of the sales tax, one who manages the business may not come to the front. Applying the doctrine of Crown Debt the assets of the unit could be attached or sold therefor. Crown Debt, as is well known, unless there is a statutory interdict, prevails over all other debts. It is based on the principle that public interest prevail over the private individual.We have referred to the doctrine of Crown Debt not for its applicability directly but to emphasise its importance in common law. A statute, particularly a fiscal one, must be construed in such a manner so as to give effect thereto. Evasion of tax is looked down upon under our constitutional and statutory schemes.If the finding of fact arrived at by the Tribunal as affirmed by the High Court is correct, we would not take recourse to a construction which will defeat the purport and object of the Act.28. Tax liability of the business concern is not in dispute. Correctness of the orders of assessment is also not under challenge. The Tribunal or for that matter the High Court were, therefore, not concerned with the liability fastened upon the dealer. The only question was as to what extent the appellant was liable therefor. It is impossible for the legislature to envisage all situations. Recourse to statutory interpretations therefor should be done in such a manner so as to give effect to the object and purport thereof. Doctrine of purposive construction should, for the said purpose, be taken recourse to.Ordinarily, we would have accepted the contention that prior to coming into force of Section 19C of the Act, there did not exist any provision in the Act to assess two persons by fastening joint and several liability. However, the superior courts and, in particular, this Court, would not come on the way of the revenue to recover arrears of tax, if it is otherwise permissible in law.30. Apart from the finding of fact arrived at by the Tribunal, the appellant upon resumption of tenancy would become liable to pay tax, if it intends to carry on its business.31. The Act provides for the mode and manner in which the revenue may be recovered. The property of the dealer, namely, one in whose name the registration stood, can be proceeded with. Its properties may be subjected to attachment and sale.32. In that view of the matter, it is not a case where, this Court, while exercising its jurisdiction under Article 136 of the Constitution of India should interfere with the impugned judgment.33. In State of Karnataka and another vs. Shreyas Papers Pvt. Ltd. and others [(2006) 1 SCC 615] , this Court held that since there is a transfer of ownership of properties of the transferee, as noticed in terms of Section 100 of the Transfer of Property Act, the charged property may be sold.34. We may observe that in law the appellant is liable to pay the amount of sales tax assessed by the assessing authority.