M V GANESH Vs. COMMERCIAL TAX OFFICER

JUDGEMENT

(1.) The petitioners, who received notice in Form No.I under the Revenue Recovery Act, stating that a sum of Rs.9,92,025/- is due towards tax and penalty in respect of the assessment year 1986-87, approached the Tamil Nadu Taxation Special Tribunal by filing O.P.No.560 of 2000 and disputing their liability contending that after receiving the said notice, they approached the High Court of Kerala, filed writ petition on the ground that there was no tax due and payable by them to the Commercial Tax Department and that the Recovery proceedings are void. The case of the petitioners is, after filing the writ petition, they understood that arrack blending licence was obtained in the name of one S.Sewak from the Commissioner (Prohibition and Excise), Madras and in which the late M.S.Viswambaran, the father of the first petitioner and husband of the second petitioner was also a partner and some arrears of sales tax was stated to be due. As per the provisions of the Act and conditions of licence, the licensee S.Sewak is not supposed to form a partnership to carry on the said business of arrack blending and such a partnership is an illegal one. That apart, it was also contended that none of the petitioners are partners in the said business and after the death of those two persons viz., S.Sewak and Viswambaran, the tax liability was shifted on the legal heirs of Viswambaran, which is untenable because there is no valid partnership business.

(2.) On behalf of the department it was contended that the arrack blending unit had been functioning under the name and style of "Methanath Agencies" and the Sales Tax authorities are collecting tax regularly. But however, after the introduction of partial prohibition, that is from 1.1.1987, there was some difficulty in payment of the tax and the cheques tendered for a sum of Rs.18 lakhs bounced. The revenue contended that the licence was granted to run the arrack blending unit only to S.Sewak, who secretly constituted a partnership in and by the said partnership, Sewak had been allotted only 5% shares and for the late Viswambaran and the petitioners 95%. Their interest and share in the business had been confirmed by means of an order of the High Court of Madras. The department took action to recover the arrears by initiating Revenue Recovery Proceedings. The Commercial Tax Officer had acted only in accordance with the provisions of the TNGST Act and Revenue Recovery Act and consequently the original petition has to be dismissed.

(3.) The Tribunal after elaborately considering the case, dismissed the OP holding that it is a clear case of tax evasion. The aggrieved petitioners are now before this Court by filing this writ petition.