MUNNA LAL SHUKLA Vs. STATE OF U P

JUDGEMENT

(1.) By means of this petition under Article 226 of the Constitution the petitioners challenge the enforcement of demand regarding certain sales tax dues for the assessment years 1965-66 to 1970-71. The petitioners are Munna Lal Shukla and Kamal Kishore Shukla, sons, and Smt. Bitto Kunwar, widow of Pt. Laxmi Narain Shukla. It appears that the first two petitioners carried on the business in manufacture and sale of pan-ka-masala under the name and style of "Badshah Pasand Karyalaya". Chunni Lal Shukla, another son of Laxmi Narain Shukla, filed a suit, being suit No. 61 of 1963, in the court of the 1st Civil Judge, Kanpur, against these petitioners. He impleaded his sons Rajendra Prasad Shukla and Surendra Kunwar Shukla as pro forma defendants. His case was that the aforesaid business was being carried on by a partnership consisting of himself, the three petitioners and his two sons and that he was entitled to have the charge and management of the business. He, therefore, prayed for a decree for permanent mandatory injunction directing defendants 1 to 3 to the suit, that is, the petitioners, to deliver charge and management of the business to him as also to render the accounts. There was a prayer for appointment of receiver also. The petitioners filed their written statement in that case wherein they averred that the aforesaid business was not a partnership business but was their proprietary business. It is not necessary to mention the other averments made by them in their written statement filed in that case. During the pendency of the case the court appointed Sri. R. N. Dar, an Advocate, as receiver by its order dated 24th February, 1966. Sri Dar could not run the business and so Sri. A. N. Srivas tava, Advocate, who is respondent No. 3 in the present writ petition, was appointed as receiver by order dated 21st May, 1966. Ultimately the suit was dismissed as withdrawn, on the plaintiffs application by order dated 24th April, 1972. In the meantime assessments under the Sales Tax Act were made in respect of the aforesaid business for the assessment years 1965-66 to 1970-71. It appears that neither the receiver nor the parties to the civil suit attended those proceedings resulting in best judgment assessments. A total demand of Rs. 45,000.75 was created for these years. Over and above that, interest at the statutory rate was also payable. Since the demand was not satisfied, steps were taken to realise the amount due from the petitioners.

(2.) The case set out by the petitioners in their petition is that after the appointment of Sri. A. N. Srivastava as receiver he obtained complete charge of the entire business of the firm Badshah Pasand Pan-ka-masala and it was his responsibility to discharge the income-tax and sales tax liabilities. It has also been alleged that the position of the receiver was that of a "dealer" under the U. P. Sales Tax Act, and therefore, it was he who was responsible to discharge the sales tax liabilities. The tax authorities in collusion with the receiver did not proceed against him to realise the outstanding dues but proceeded against the petitioners which action was wholly illegal and uncalled for. The petitioners hence pray for the issue of a writ, order or direction restraining the respondents Nos. 1 and 2 from enforcing the liability in respect of sales tax for the aforesaid period against the petitioners and for proceeding to realise the same from respondent No. 3.

(3.) Counter-affidavits have been filed on behalf of the respondents. The stand taken on behalf of the State of Uttar Pradesh and the Deputy Collector, Sales Tax, Kanpur, is that the assessments were properly done and since they were not challenged by way of appeal or revision they became final; that the demand created as a result of those assessments is liable to be enforced against the proprietors of the business, that is, the petitioners. Further, the position of the receiver was not that of a dealer. He was only managing the business on behalf of the proprietors of the business, and therefore, the liability to pay sales tax dues was that of the petitioners. It is denied that there was any collusion between the tax authorities and the receiver.