PRADEEP NANJEE GALA Vs. SALES OFFICER ENFORCEMENT BRANCH

JUDGEMENT

(1.) The petitioner claims that as a result of the settlement arrived at, the petitioner is relieved of all the obligations to pay the sales tax dues payable by the firm in which he is held to be a partner for Samvat year 2034 and 2035. Accordingly, the petitioner seeks a declaration that the respondents are not entitled to recover any further amount from the petitioner in respect of the sales tax dues payable by the firm. In the alternative, the petitioner claims that the amount collected from the petitioner pursuant to the above settlement must be refunded to the petitioner with 24% interest.

(2.) The facts relevant for the present petition are that the petitioner carried on business in the name of M/s Hemal Traders. A Partnership Firm known as m/s Joshi, Karanunashankar Liladhar and Company ('firm' for short) , a registered dealer under the Bombay Sales Tax Act, 1959 ('b. S. T. Act' for short) was indebted to M/s Hemal Traders for a sum of Rs. 10,00,000/ -. With a view to secure the said amount, the petitioner was inducted as a partner of firm from 8-4-1978 as a sleeping partner by executing a deed of partnership on 8-4-1978. Under the said partnership deed the petitioner was entitled to share in the profits of the partnership at 34% which was the highest amongst all the partners. The petitioner claims that the fact of his joining the firm as a partner was not intimated to the sales tax authorities as the petitioner was only a formal partner and was not to participate in the business and was not to bear any liability of the firm. It is the case of the petitioner that by a notice dated 27-10-1978 he had sought to retire from the firm with effect from 1-11-1978 and the same was accepted by all the partners and the same was recorded in the deed of retirement executed on 27-6-1979.

(3.) In the meantime, the Sales Tax Officers from the Enforcement Branch had visited the office of the firm on 26-6-1979 and 2-7-1979 and had taken away the accounts and records of the firm for the period commencing from 12-11-1977 to 31-10-1978 and 1-4-1978 to 24-6-1979.