1. This petition under Article 226 of the Constitution is directed against certain proceedings taken by the Additional Tahsildar, Bilaspur, under the provisions of the Madhya Pradesh Land Revenue Code, 1959. for recovering from the petitioner arrears of sales-tax amounting to Rs. 44,166/- which were assessed on sales made by Messrs. Bisahoolal Bajranglal of Akaltara.
2. The facts giving rise to this petition, shortly stated, are these. One Bisahoolal and certain other persons carried on business at Akaltara under the name and style of Bisahoolal Bajranglal. They had applied for registration in the year 1947 and obtained a registration certificate bearing No. Jagr/94 dated 6 September 1947. This concern discontinued its business with effect from 15 April 1952 and its registration certificate was, by an order of the Assistant Commissioner of Sales Tax, Bilaspur, dated 31 March 1962, cancelled from that date. Even so, on 21 October 1961, it was assessed to a tax of Rs. 20,551.69 on the sales it had made in the year 1949-50 and, on 31 October 1961, it was similarly assessed to a tax of Rs. 23,635.18 for the year 1950-51. Notices of demand were duly issued and served on Bisahoolal on 23 September 1963. In answer, he made to the Deputy Commissioner of Sales Tax, Jabalpur, an application dated 26 September 1963 asking for one month's time on the ground that Matadin (petitioner), who had been charged with the responsibility of paying the taxes, was on a pilgrimage. Thereupon, a revenue recovery certificate was issued and proceedings under the Code of 1959 for recovering the arrears of tax were taken against the petitioner.
He filed before the Sales Tax Officer, who had been clothed with the powers of an Additional Tahsildar, an application dated 20 November 1963 objecting to the proceedings taken against him. By an order dated 28 December 1963, that objection was rejected. Being aggrieved, the petitioner filed two successive appeals against that order, but they were dismissed by the Sub-Divisional Officer, Bilaspur, and the Commissioner on 8 May 1964 and 9 June 1964 respectively. Then, by an order dated 7 August 1964, the Additional tahsildar created, on a sum of Rs. 19,500.39 payable to the petitioner and standing to his credit in the books of the firm Messrs. Laxmi Mill Stores, Bilaspur, a charge for the arrears of tax. By another order dated 26 October 1964, Gyarsilal, another partner of Messrs. Laxmi Mill Stores, Bilaspur, was requested to intimate if he was willing to be appointed a receiver of the petitioner's share of profits in the business of that firm. The petitioner has moved this Court for relief mainly on the ground that he had nothing whatsoever to do with the concern Bisahoolal Bajranglal, that he was in no way liable for the arrears of tax due from that concern and that recovery proceeding initiated against him were wholly without jurisdiction.
3. This petition has been resisted mainly on the ground that, on the facts and in the circumstances of the case, proceedings taken for recovery of the arrears of tax against the petitioner were fully justified under the provisions of Section 33 (4) of the Madhya Pradesh General Sales Tax Act, 1958 According to the respondents, the business carried on in the name of Bisahoolal Bajranglal was owned by a Hindu undivided family of which the petitioner was a member Further, that joint family had interest in the firm Laxmi Mill Stores and the petitioner entered into that partnership as representing the joint family. Finally, when there was a partition of the joint family, the petitioner expressly undertook to discharge the family debts, including arrears of tax.
4. Section 33 (4) of the Madhya Pradesh General Sales Tax Act, 1958, on which the respondents have strongly relied, reads as follows:
'(4) When a dealer is a firm or association of persons or a joint Hindu family and such firm, association or family has discontinued business -
(a) the tax payable under this Act by such firm, association or family for the period up to the date of such discontinuance may be assessed and determined as if no such discontinuance had taken place; and
(b) every person who was at the time of such discontinuance a partner of such firm or a member of such association or family shall, notwithstanding such discontinuance, he liable severally and jointly for the payment of tax assessed as payable by such firm, association or family, whether such assessment is made prior to or after such discontinuance and, subject as aforesaid the provisions of this Act shall apply as if every such person or partner were himself a dealer:
Provided that when it is found that a change has occurred in the constitution of the firm or association or that such firm or association has transferred its business and the tax payable by a partner or a member as aforesaid cannot be recovered from him. it may be recovered from the firm or association as reconstituted, or from the transferee:
Provided further that where a tax is recovered from the firm or association or transferee as aforesaid, such lirm or association or transferee shall be entitled to recover the same from the partner or member who was originally liable to pay the lax. Explanation.--The dissolution or reconstitution of a firm or association of persons or partition of a joint Hindu family shall be deemed to be discontinuance of business within the meaning of this sub-section.'
In view of this provision, there is no doubt that the taxing authorities could recover the arrears from the petitioner if, in the years 1949-50 and 1950-51. he was a member of the Hindu undivided family owning the concern Bisahoolal Bajranglal But the petitioner contends that he was not a member of that Hindu joint family, that he had nothing whatsoever to do with it and Unit, therefore, the taxing authorities have no jurisdiction to proceed against him. It is a well established principle that all Courts and all officers upon whom is casi the duty of deciding a case judicially or quasi-judicially must entertain objections to the jurisdiction of their own authority Budh Prakash Jai Prakash v. Sales Tax Officer Kanpur, 1952-3 STC 185: (AIR 1952 All 764) Further following Dhakeshwari Cotton Mills Ltd. v. Commr. of Income-tax. West Bengal, 1955-1 SCR 941: (AIR 1955 SC 65): Suraj Mall Mohta and Co. v. A. V. Visvanalha Sastri. 1955-1 SCR 448: (AIR 1954 SC 545) and Mahadaval Premchandra v. Commercial Tax Officer. Calcutta, 1959 SCR 551: (AIR 1958 SC 667), we indicated in the Commissioner of Sales Tax, Madhya Pradesh v. Mangilal Rameshwar Daval. Misc. Civil Case No. 86 of 1962, dated 13-9-1962 (Madh Pra) that the taxing authorities performing duties under the Madhya Pradesh General Sales Tax Act exercised quasi-judicial functions and they must observe the rules of natural justice.
In the instant case, the amount due as arrears of tax from Bisahoolal Bajranglal is sought to be recovered from the petitioner on the assumption that he was a member of the Hindu undivided family owning that concern, that the money charged for payment of the arrears really belonged to that family and that, when the petitioner separated, he had undertaken to pay the arrears of tax. As already indicated, the petitioner contests each one of these facts. It is obvious, and is not disputed either, that before the revenue recovery certificate was issued in this case, no enquiry was made regarding the liability of the petitioner to pay the arrears and he was not given any opportunity to show that he was not liable. Again, when he raised the question before the Additional Tahsildar, that officer summarily rejected the objection. Further, in the two successive appeals filed by the petitioner against that order, it was concurrently held that the question could not be raised in proceedings initiated upon the basis of a revenue recovery certificate. Thus, at no stage was the petitioner given an opportunity to substantiate his case that he was not liable for the arrears of tax and the whole procedure was contrary to the rules of natural justice. That being so, the proceedings taken against the petitioner cannot bo sustained.
5. Nothing that we have said in this order should be regarded as suggesting that the liability of the petitioner for the arrears of tax should not be ascertained. On the other hand, it is implicit in what we have slated that it would be open to the taxing authorities to proceed against him under Section 33 (4) of the Act on the basis of properly ascertained facts after giving to the petitioner an opportunity of being heard.
6. The petition succeeds and is allowed. The revenue recovery certificate and all proceedings taken thereunder, including the orders dated 7 August 1964 and 26 October 1964. are quashed. The respondents shall bear their own costs and pay those incurred by the petitioner to whom the security amount shall be refunded. Hearing fee Rs. 100.