SOPARKAR INDUSTRIES THANE Vs. COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) THE petitioners are a partnership firm and are registered with the Sales Tax Division and are required to pay sales tax in respect of their business. The petitioners committed default of payment of sales tax of Rs. 21,000/-for year 1979, Rs. 8, 408/- for year 1980 and Rs. 18,795/-for year 1982, the total being Rs. 48,203/ -. The Sales Tax authorities demanded the dues from the petitioners and on July 1, 1980, the petitioners addressed letters to the Sales Tax Officer, Thane, reciting that the petitioners are unable to pay the dues due to stringent financial condition and requested to recover Rs. 11,529. 82 from M/s. Nathani Automotive Products Private Limited. The petitioners claim that M/s. Nathani Automotive Products Private Limited are their debtors to the extent of Rs. 11,529. 82. On the receipt of this letter, the Sales Tax authorities served notice under Section 39 of the Bombay Sales Tax Act, 1959 upon M/s. Nathani Automotive Products Private Limited and in reply on August 19, 1980, M/s. Nathani Automotive Products Private Limited informed the petitioners that they will directly pay Rs. 11,530/- to the Sales tax Officer and on such payment all the claims of the petitioners will stand fully satisfied.

(2.) IT is not in dispute that M/s. Nathani Automotive Products Private Limited did not pay a single farthing to the Sales Tax authorities. After waiting for a considerable length of time, on January 9, 1983, the Sales Tax authorities served notice upon the petitioners to pay the sales tax dues of Rs. 48, 213/- and the penalty of the same amount within the stipulated period. The petitioners failed to pay the said amount of sales tax due and the penalty and thereupon on January 19, 1983, an attachment order was issued attaching the Bank amounts of the petitioners. The petitioners then filed the present petition on July 4, 1983 to challenge the action of the Sales Tax authorities in demanding sales tax dues and the penalties.

(3.) SHRI Vaze, learned Counsel appearing on behalf of the petitioners, submitted that M/s. Nathani Automotive Products Private Limited had agreed to clear the part of the dues of the petitioners and as the Sales Tax authorities had commenced proceedings under Section 39 of the Bombay Sales Tax Act, it was incumbent upon the Department to follow up the proceedings and recover the amount. Shri Vaze submitted that the Department failed to recover the amount and the petitioners have lost their remedy to file action against M/s. Nathani Automotive Products Private Limited to recover the dues and, therefore, it should be declared that the sales tax dues of the petitioners are wiped out. It is impossible to accede to the submission. Merely because, the petitioners recommended that an amount of Rs. 11,530/- should be recovered from the debtor M/s. Nathani Automotive Products Private Limited and merely because the Department served notice upon M/s. Nathani Automotive Products Private Limited under Section 39 of the Act, that fact cannot wipe out the liability of the petitioners to pay the sales tax dues. Section 39 of the Act does not cast any duty upon the Department to proceed against the debtors of the defaulters but Section 39 of the Act is only an enabling provision. The reason why the Department did not proceed against M/s. Nathani Automotive Products Private Limited is not far to seek. Shri Vaze very fairly stated that M/s. Nathani Automotive Products Private Limited was financially broken and consequently the Department could not have recovered the amount. We are unable to appreciate how the liability of the petitioners will vanish merely because one of the debtor of the petitioners agreed to pay part of the sales tax dues. The complaint of Shri Vaze that the failure of the Department to proceed against M/s. Nathani Automotive Products Private Limited had exhausted the petitioners' right to file action against M/s. Nathani Automotive Products Private Limited is without any merit. On August 19, 1980, M/s. Nathani Automotive Products Private Limited had acknowledged the liability of Rs. 11,530/- by addressing letter to the petitioners. M/s. Nathani Automotive Products Private Limited did not pay any amount to the Department and the Department issued notice to the petitioners on January 9, 1983. The right of the petitioners to institute suit against M/s. Nathani Automotive Products Private Limited was still within limitation. Shri Vaze submits that the suit was not filed because M/s. Nathani Automotive Products Private Limited by that time had become insolvent and if that is the correct position, then it is impossible to imagine how the petitioners' claim that the Department should have proceeded against M/s. Nathani Automotive Products Private Limited and left the petitioners alone can be accepted. In our judgment, the complaint of the petitioners against the Department is without any merit.