Decided on January 09,1968



- (1.)THIS writ application under Art. 226 of the Constitution of India has been filed by petitioner Krishanlal Malhotra for obtaining a writ, direction or order to restrain the respondents from recovering the tax under the assessment orders which have been marked as Exs. 1 to 4.
(2.)THE petitioner's case is that he is carrying on business of plying motor-buses and trucks on various routes in and outside Rajasthan and that he is the shareholder and director of the Jaipur Golden Transport Company Ltd. with its head office at Delhi since 1953. In 1953, he owned a bus (No. RJL 465) under a stage carriage permit granted to him by the Regional Transport Authority in his individual capacity. He sold the said bus and its business to one Sitaram who plied it for a few years and then sold, in turn, to Shri Radheysham Sharma, resident of Jaipur City. THE said bus was plied by Radheyshyam on Jaipur-Diggi-Deoli route thereafter. Thus, according to the petitioner, he had nothing to do whatsoever with the said bus or its business ever since the year 1953 when it was sold away. THE petitioner's allegation is that respondent No. 3, namely, the Commercial Taxes Officer, C-Circle, Jaipur assessed Shri Radheyshyam Sharma as owner of the said bus under the Rajasthan Passengers and Goods Taxation Act, 1959 and the Rules made thereunder (which will hereinafter be referred to as the "act" and the "rules") in respect of years 1959 60,1960-61,1961-62 and 1962 63. He has placed on record the copies of the assessment orders passed by respondent No. 3 and they are marked as Exs. 1 to 4. THE petitioner proceeds to say that for the assessment years 1959-60 and 1960-61 he was never served with any kind of notice. As regards the assessment years 1961-62 and 1962-63 a notice was issued to him and in pursuance thereof he appeared before the respondent No. 3 along with Redheyshyan on 6-7-65 and submitted to him that he was not liable to be taxed since the bus and the business pertaining thereto was already sold away by him According to him, Radheyshyam, who was present before respondent No 3, was examined by him and his statement was recorded. Radheyshyam deposed before respondent No. 3 that he was the owner of the said bus and was responsible for the tax, if any, due to the business of the said bus. THE petitioner says that Radheyshyam again filed an affidavit attested by the Additional Munsif-Magistrate First Class, Jaipur before respondent No. 3, mentioning that the bus was purchased by him in 1958, that he was plying it since then and that it was he who was liable for all taxes due in respect of its business. THE petitioner's grievance is that in respect of assessment years 1959-60 and 1960-61 no notice having been given to him, he could not be held liable for the amount assessed by respondent No. 3. Even as regards the years 1961-62 and 1962-63 he was not liable to p)ay the tax since respondent No. 3 had treated Radheyshyam as the owner of the bus before passing the assessment order. Yet, respondent No. 3 issued on 9-9-66 a warrant of attachment against the petitioner for attachment of his movable property for recovery of the amount due on account of the said four assessment orders. It is contended that no notice of demand was served on the petitioner before the issue of the warrant of attachment. It is, therefore, prayed that the said warrant of attachment should be quashed and the respondents should be restrained from enforcing the recovery of tax under the said assessment orders. It is further prayed by him that the respondents should also be restrained from assessing him afresh in respect of the said bus.
The writ application is opposed on behalf of the respondents. It is urged by Shri Rajnarain, learned Deputy Government Advocate, that the petitioner's contention to the effect that the bus was sold away to Radheyshyam was not correct, and that this argument has been raised by him only to escape from his liability to pay the tax. In other words, the petitioner and Radheyshyam, according to the learned Deputy Government Advocate, are in collusion and the petitioner is shifting his responsibility on to Radheyshyam as the latter is not in a position to pay up the tax. It is further urged that in respect of the assessment years 1959-60 and 1960-61 the notice was issued in the name of the petitioner but the petitioner did not appear before respondent No. 3 and instead Radheshyam put in appearance as an agent of the petitioner and, therefore, the petitioner was responsible for payment of the tax assessed in respect of these years. As regards the tax assessment years 1961-62 and 1962-63, it is pointed out that the petitioner was served with a notice, that he appeared before the respondent No. 3 on 6-7 65, that he failed to put in appearance on 20-7-65, that he did not care to produce his account books and, therefore, he was assessed by respondent No. 3 according to his best judgment. It is urged that under the circumstances there is no merit in the writ application and it should be rejected.

As regards the objection about the notice of demand, it is urged that a notice was given to the petitioner. He has referred to a copy of the petitioner's application dated 26 2-66 (Ex. R/7) to show that the petitioner would not have submitted such an application if a notice were not given to him.

The short question that arises for our determination in this case is whether the first principles of natural justice were observed, and the petitioner was afforded an opportunity of being heard before the assessment orders Exs. 1 to 4 were passed and, if not, whether the petitioner is liable to pay the tax on their basis.

We may first take up the question relating to the assessment years 1959-60 and 1960 61. It does appear from the perusal of Ex. R/3, which is a copy of a notice calling upon the petitioner to appear before respondent No. 3 on 8-9-61, that it was served only on Radheyshyam and not on the petitioner. A perusal of the assessment orders Exs. 1 and 2 shows that in both of them the Commercial Taxation Officer, respondent No. 3, mentioned the name of Radheyshyam alone as the owner and permit-holder of bus No. RJL 465. In both the assessment orders there is no mention of the petitioner's name at any place. On the contrary, it appears that Radheyshyam alone was assessed as owner and permit-holder of the said bus. No document has been brought on record to show if the petitioner had any intimation of the notice Ex. R/3 or that Radheyshyam was treated as an agent of the petitioner in terms of the definition of the word 'agent' given in Rule 2 (b) of the Rules. It may be pointed out here that the word 'agent' has been defined in Rule 2 (b) as follows: "rule 2 (b) - "agent" means a person authorised in writing by an owner to appear on his behalf before any officer or authority acting under the Act, being - (i) friend or relation of the owner; or (ii) a person holding a general or special power of Attorney executed by the owner; or (iii) a Sales Tax Practitioner as defined in the Rajasthan Sales Tax Rules, 1955. There is nothing in Ex. 1 and 2 to show if respondent No. 3 treated Radheyshyam as a friend or relation of the owner or as a person holding a general or special power of attorney on his behalf. It is not alleged if Radheyshyam was a sales-tax practitioner. On the other hand, as we have already pointed out above, Radheyshyam appears to have been assessed in his personal capacity as an owner and permit holder of the said bus. Since the assessment orders Exs. 1 and 2 were passed behind the back of the petitioner and he was not afforded any opportunity of appearing before respondent No. 3 or of being heard by him these assessment orders cannot be held binding on him.

Now, coming to Exs. 3 and 4 which relate to the assessment years 1961-62 and 1962-63, it appears from the copy of the order-sheets Exs. R/5 and R/6 produced on behalf of the respondents that the petitioner was served with a notice and that he appeared before respondent No. 3 on 6-7-65. It further appears from Ex. 5, which has been produced by the petitioner, that on that date Radheyshyam was examined orally by respondent No. 3 and his statement was reduced into writing. In the said statement, it was deposed by Radheyshyam that he had purchased the said bus on 1-1-60 and that he was plying it thereafter in his own right. It was also stated by him that he would appear on the next date, i. e. on 20-7-65 with relevant papers relating to the business. In the order-sheet dated 6-7-65 respondent No. 3 directed Radheyshyam alone to appear on 20-7-65 with relevant papers. The order-sheet of 20-7-65 shows that Radheyshyam alone appeared on that day. It is contended by the learned Deputy Government Advocate on the basis of the order-sheet of 20-7-65 that from its perusal it is clear that respondent No. 3 treated Radheyshyam as a person appearing on behalf of the petitioner. On the other hand, it is urged by the petitioner's learned counsel that from the trend of the order-sheet dated 6-7-65, his client was under an impression that respondent No. 3 had accepted the version of Radheyshyam as given in his statement dated 6-7-65, that he wanted to proceed only against Radheyshyam, that the petitioner was not held liable for any tax and so, he did not put in appearance thereafter. A perusal of the order-sheets dated 6 7-65 and 20-7-65 shows that respondent No. 3 was not clear in his mind about the respective liability of the petitioner and Radheyshyam. He did not make a clear order on 6 7-65 if he had absolved the petitioner from his responsibility to pay the taxes but the trend of his order does show that in his opinion Radheyshyam was the person liable to pay the tax and, therefore, he asked him alone to appear on the next date. Having recorded the statement of Radheyshyam, it was incumbent upon respondent No. 3 to direct the petitioner to put in his appearance on the next date if he thought that he was still responsible for assessment and for payment of tax when Radhey Shyam had clearly 'taken the entire responsibility upon him. In the order-sheet dated 20-7-65, he, no doubt, used one word incharge for Radheyshyam but that again shows that he was not quite clear in his mind because the word 'incharge' did not convey any clear meaning. At any rate, the petitioner had good reasons to think after 6-7-65 that he was not called upon to appear on the next day or to submit the return of accounts. In the assessment orders Exs. 3 and 4, respondent No. 3 mentioned the names of the petitioner and Radheyshyam both but in the body of his order, he again did not make it clear if he had assessed the petitioner to tax. After referring to the order-sheet it was noted by him that Radheyshyam was given an opportunity to produce the accounts on 23-7 65, that the owner, however, did not put in appearance on that day and that he was therefore assessing the owner to a tax of Rs. 2600/ -. A perusal of this order shows as if he was treating Radhey Shyam as the owner of the bus and not the petitioner as its owner. Thus, the petitioner had no opportunity of being heard by respondent No. 3 in respect of the taxes due for the assessment years 1961-62 and 1962-63 and these assessment orders Exs. 3 and 4 also dated 26-7-65 cannot be held binding on the petitioner.

It may be further observed that according to Rule 20 if any sum is payable by an owner under the Act or the Rules, a duty is cast on the assessing authority to serve a notice in form R. P. G. T. 10 on the assessee. It is also obligatory for him to fix a date not less than 15 days from the date of service to enable the assessee to furnish receipted challan in proof of the payment of tax which he is called upon to deposit. According to sec. 11 (2) of the Act, it is, no doubt, open to the assessing authority with the previous approval of the Commissioner in writing to recover the tax in the prescribed manner by attachment and sale of the owner's movable property, but according to Rules 20 and 31 read with secs. 229 and 230 of the Rajas-than Land Revenue Act, 1956, it does appear that according to the scheme it is necessary that a Notice of Demand should be served on the assessee before issuing process for attachment of his property. The respondents have not produced before this Court the notice of demand, if any, issued under R. 20. The learned Deputy Government Advocate has, no doubt, referred to Ex. R/7 and he wants this Court to spell out from its perusal that a notice must have been issued. We, are, however, unable to draw such an inference from this document, since it does not make any mention of such notice. The resultant position is, that since Exs. 1 to 4 are not binding upon the petitioner, he cannot be called upon to pay the tax assessed by the respondents an their basis. A notice of demand could not have been issued against the petitioner under Rule 20 on that basis.

The writ application is, therefore, fit to be allowed to the extent that the respondents should be restrained from realising from the petitioner any amount on the basis of Exs. 1 to 4.

As regards the petitioner's request for restraining the respondents from assessing him in future in respect of bus No. RJL 465, it would suffice to say that he has not produced before this Court any document to show if he had obtained the requisite permission under the law to transfer the permit of the said bus in favour of Sitaram or Radhey Shyam and that his liability to pay the tax under the Act had come to an end. Under the circumstances, we cannot express any opinion on this question. It would certainly be open to the respondents to proceed to assess him regarding the business of the said bus according to law and it will be for the petitioner to satisfy the assessing authority whether or not he was liable to pay the tax.

The writ application is, therefore, partly allowed and the respondents are restrained from enforcing the recovery of tax under the assessment orders Exs. 1 to 4. The respondents are, however, left free to proceed against the petitioner according to law. In the circumstances of the case, the parties are left to bear their own costs in this Court. .


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