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Chandrakantha R. Ghodke Vs. Commercial Tax Officer, V Circle, Hubli and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKarnataka High Court
Decided On
Case NumberWrit Petition No. 3467 of 1979
Judge
Reported inILR1987KAR132; [1986]63STC440(Kar)
ActsKarnataka Sales Tax Act - Sections 13; Central Sales Tax Act; Mysore Sales Tax Act, 1957 - Sections 13(3)
AppellantChandrakantha R. Ghodke
RespondentCommercial Tax Officer, V Circle, Hubli and ors.
Appellant AdvocateB.V. Katageri, Adv.
Respondent AdvocateH.L. Dattu, High Court Government Pleader
Excerpt:
.....and occupation no proper challenge to the evidence let in by the landlord held, the requirement of the landlord to be presumed. there is no place for considering comparative hardship under the act. where the landlord claimed that he has inherited the property under a will and there was no challenge by other legatees or claimants, the tenant cannot challenge the genuineness of the will. - ghodke and brothers, a firm in hubli, were registered dealers under the karnataka sales tax act as well as the central sales tax act for the assessment years 1964-65 to 1972-73. the said firm was dissolved on 15th august, 1973. only the assessment for the assessment year 1972-73 subsequent to the said dissolution was completed on 31st august, 1974. all the assessments for the years 1964-65 to 1972-73..........hubli. on the notices issued by the tax recovery officer in form no. 41 and the proclamation of sale issued in form no. 47, the names of all the legal representatives of r. k. ghodke are mentioned. at the same time it is not disputed that on notices as required under section 13 of the act were issued to the widow and her sons before the property was brought to sale. since i have come to the conclusion that the entire proceedings for recovery, which terminated in the auction sale held on 11th october, 1979, are illegal, the said sale has to be set aside. 18. in the result, the writ petition is allowed and the sale conducted by the second respondent in respect of item 2 in the schedule to the proclamation of sale, i.e., cts no. 3527, ward no. 1 in maratha gally, hubli, is set aside. the.....
Judgment:

S.R. Rajasekhara Murthy, J.

1. This writ petition was disposed of by order dated 16th July, 1985. Since I found the constitution of the partnership firm of M/s. Ghodke and Brothers, Hubli as stated in the petition was different from what was stated in paragraph 2 of the statement of objections filed by the Government, I therefore, directed the Government Pleader to file a clarificatory statement.

2. The two partners of the partnership firm M/s. Ghodke and Brothers, during the relevant period were Gangappa son of Mallappa Ghodke and Ramachandra son of Fakirappa Ghodke, who died on 6th September, 1974, and 16th February, 1974, respectively. Though it is asserted in the petition that those two partners constituted the partnership firm, according to the statement of objections, it consisted of three partners, viz., Fakirappa Devendrappa Ghodke, Basappa Devendrappa Ghodke and Gangappa Mallappa Ghodke.

3. By order dated 14th August, 1985, I recalled the order dictated earlier on 16th July, 1985, and the learned Government Pleader was directed to explain this inconsistency as to the constitution of partnership. On further hearing and on a perusal of the records produced by the Government Pleader, it was seen that Gangapppa Mallappa Ghodke and Ramachandra Fakirappa Ghodke were the only two partners during the relevant period and the insertion of Basappa Devendrappa Ghodke in the statement was a mistake.

4. With this clarification, I proceed to make the following :

ORDER

M/s. Ghodke and Brothers, a firm in Hubli, were registered dealers under the Karnataka Sales Tax Act as well as the Central Sales Tax Act for the assessment years 1964-65 to 1972-73. The said firm was dissolved on 15th August, 1973. Only the assessment for the assessment year 1972-73 subsequent to the said dissolution was completed on 31st August, 1974. All the assessments for the years 1964-65 to 1972-73 had been completed during the life time of R. F. Ghodke and all the demand notices were served on him.

5. The petitioner is one of the sons of late Ramachandrappa Fakirappa Ghodke who died on 16th February, 1974. He left behind his widow Hirabai Ramachandra Ghodke, his sons Chandrakant Ramachandra Ghodke (the petitioner) and Mallikarjun Ramachandra Ghodke. Recovery proceedings were taken by the Tax Recovery Officer-respondent-2 in pursuance to the certificate issued by the assessing officer-respondent-1. Steps were taken thereafter to recover the tax due as per annexure R-3 filed along with statement of objections, by attaching the properties belonging to late R. F. Ghodke. As many as 6 items of properties were attached by the Tax Recovery Officer. One of them was sold on 11th October, 1979, in auction and the said property was purchased by one Viswanatha Baddi for Rs. 60,000. The said sum was deposited by the auction purchaser and by order dated 1st October, 1981, the auction purchaser has been impleaded as a party to this writ petition. This Court also stayed the confirmation of the sale in respect of the said property pending disposal of the writ petition. A further direction was issued to deposit Rs. 60,000 in a nationalised bank for a period of one year in the first instance subject to renewal periodically till the writ petition is finally disposed of.

6. The petitioner's contention in this writ petition is that after the death of Ramachandrappa Fakirappa Ghodke on 16th February, 1974, no notice was issued under section 13 of the Karnataka Sales Tax Act to the L. Rs. of the deceased partner before bringing his properties to sale. The sale was held on 11th October, 1979, on the strength of the recovery certificate issued by the assessing officer.

7. The recovery proceedings are therefore challenged in this writ petition and the petitioner has prayed for setting aside the sale held on 11th October, 1979, as void and illegal.

8. The learned Government Advocate has produced the records of recovery in this case. The legal heirs of R. F. Ghodke as stated in the proclamation of sale, are his widow Smt. Hirabai and his sons Chandrakant Ramachandra Ghodke (the petitioner) and Mallikarjun Ramachandra Ghodke. The statement, annexure R-3 filed along with the statement of objections shows that the notice of demand had been served on late R. F. Ghodke in respect of assessment years 1964-65 to 1971-72. It is not clear from the statement of objections on who was the notice served in respect of the assessment year 1972-73. However, this is not relevant for the purpose of examining the question as to the validity of the recovery proceedings since the arrears also relate to the earlier years 1964-65 to 1971-72.

9. The petitioner has contended that a notice under section 13 of the Act is mandatory and is required to be served on all the L. Rs. of the deceased assessee before his property is brought to sale. He has relied upon the following decisions of this Court in which the validity of recovery proceedings in similar circumstances was considered.

10. In the case of Shri Seshayya v. Assistant Commercial Tax Officer, Gangavati [1971] 28 STC 306 (Mys.) this Court has held that recovery proceedings under section 13(3)(b) of the Mysore Sales Tax Act, 1957, should be taken against all the legal heirs of the deceased assessee. The deceased assessee had left behind him three sons, two daughters and a widow in that case. For recovering the tax due from the deceased assessee, notices of demand were served only on three sons of the deceased and thereafter recovery was initiated by filing application under section 13(3)(b) of the Act before the Magistrate who issued warrant of attachment of the movables of all the sons. Dealing with section 16 of the Act it was held that the liability to pay the tax due from the deceased assessee is imposed on all the legal representatives of the deceased assessee and the recovery proceedings initiated only against the sons of the deceased were quashed.

11. Same is the view taken by this Court in the case of Smt. Lakshmi Ammal v. Commercial Tax Officer, XIV Circle, Bangalore [1983] 54 STC 369. A decision rendered by a Full Bench of this Court in Raja Pid Naik v. Agricultural Income-tax Officer, Yadgiri : [1968]69ITR401(KAR) was followed in Laxmi Ammal's case : 1983(2)KarLJ56 . In Raja Pid Naik's case : [1968]69ITR401(KAR) recovery proceedings have been initiated against the petitioner therein under the Hyderabad Agricultural Income-tax Act, 1950, on only one of the legal representatives of Raja Pid Naik and without issue of notice of demand.

12. The procedure for recovery provided under the Hyderabad Agricultural Income-tax Act more or less corresponded to the procedure provided in the Karnataka Agricultural Income-tax Act. Their Lordships examined this aspect in detail and laid down when an assessee dies all his legal representatives should be treated as defaulters for the purpose of recovery and not any one of them only. Their Lordships further held that the certificate authorising recovery from the assessee defaulter or his legal representative could be issued only after demand notice is served on the assessee or the L. Rs. as the case may be, which is a condition precedent for authorising recovery proceedings to be taken against the defaulter under the Act.

13. In another Division Bench decision of this Court reported in S. M. Suligavi v. Judicial Magistrate, Court First Class : ILR1980KAR1461 , this Court has laid down that the recovery proceedings taken against an ex-partner without service of notice of demand on him under section 13 of the Karnataka Sales Tax Act are not lawful. Elaborate rules are prescribed under the Act providing for notice to the assessee in default. Part V-B of the Rules prescribes the procedure for recovery of tax. Certificate of recovery is issued as required under rule 38-D of the Rules. 'Certificate' means cerificate received by the Tax Recovery Officer under rule 38-D. 'Defaulter' is defined under rule 38-C and means the assessee or dealer or any other person mentioned in the certificate. A certificate of recovery is issued by the assessing officer to the Tax Recovery Officer mentioning the name of the assessee or any other person who is deemed to be in default, as the person against whom the Tax Recovery Officer shall proceed to recover the amount specified therein. The said rules also provide for mode of attachment or distrait and the sale of dafaulter's movable/immovable property and other matters.

14. Under rule 42 of the Rules notice is required to be issued to the legal representatives of the deceased assessee before recovery is taken against them under the Act.

15. However, section 13 is the substantive provision which provides the recovery proceedings under the Act and as ruled by several decisions of this Court referred to above, a notice is held to be mandatory.

16. On the facts of the present case, it is not in dispute that no such notice was issued to all the legal representatives of the deceased R. F. Ghodke, namely, his widow and his sons. It in unfortunate that on account of the failure to conform to the requirement of law and procedure, the sale has got to be set aside and the property that was sold has got to be restored to the possession of the petitioner which necessarily results in hardship to the auction purchaser.

17. The proceedings for recovery by the Tax Recovery Officer in this case are obviously taken in pursuance to the certificate issued by the Assistant Commissioner, Hubli. On the notices issued by the Tax Recovery Officer in form No. 41 and the proclamation of sale issued in form No. 47, the names of all the legal representatives of R. K. Ghodke are mentioned. At the same time it is not disputed that on notices as required under section 13 of the Act were issued to the widow and her sons before the property was brought to sale. Since I have come to the conclusion that the entire proceedings for recovery, which terminated in the auction sale held on 11th October, 1979, are illegal, the said sale has to be set aside.

18. In the result, the writ petition is allowed and the sale conducted by the second respondent in respect of item 2 in the schedule to the proclamation of sale, i.e., CTS No. 3527, Ward No. 1 in Maratha Gally, Hubli, is set aside. The respondents are, however, at liberty to take fresh proceedings for recovery in accordance with law and in the light of the observations made in this order.

19. The auction purchaser is entitled to the return of the money deposited by him and the interest accrued thereon upto the date of withdrawal from the bank.

20. In the result the writ petition is allowed and rule issued is made absolute.

21. Writ petition allowed.


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