Sh. Sanjeev Bhaskar vs Assistant Collector, Recovery and Another

Rajiv Sahai Endlaw, J.—The writ petition impugns the Demand dated 24th March, 2011 issued by the Respondent No. 1 Assistant Collector to the Petitioner with respect to the arrears of approximately `12 lacs of sales tax pertaining to the assessment year 1983-84 of M/s Ishwar Industries Ltd. and warning the Petitioner that upon non-payment thereof, the amount shall be recovered by arrest and attachment of the properties of the Petitioner.

The Petitioner claims that though earlier he was interested in the said M/s Ishwar Industries Ltd. but was in the relevant year not a Director of the said Company and the recovery of the dues if any of the said Company cannot be made from him. It is further his case that under the inter se settlement between various constituents of the said Company also, he is not so liable.

The counsel for the Respondent No. 1 and Respondent No. 2 Assessing Authority of Sales Tax, appears on advance notice.

The procedure with respect to the recovery of amounts as arrears of land revenue has recently been the subject matter of judgment dated 14th March, 2011 in W.P.(C) No. 1598/2011 titled P.C. Aggarwal v. GNCTD. The Respondent No. 1 Assistant Collector is not competent to adjudicate the questions as raised by the Petitioner as to his liability. The Respondent No. 1 Assistant Collector is to, upon the demand remaining unpaid, arrest the alleged defaulter and to hear him on the aspect whether his detention will compel recovery or not. The questions as raised by the Petitioner are to be adjudicated by the authority which has issued the Recovery Certificate which is being executed by the Respondent No. 1 Assistant Collector.

It has as such been enquired from the counsel for the Respondents as to which is the authority issuing the Recovery Certificate.

The counsel for the Respondents has invited attention to Section 25 of the Delhi Sales Tax Act, 1975 particularly to Sub-section (7) thereof providing that the amount of tax or penalty in respect of which the dealer or person is in default is recoverable as arrear of land revenue. He has further invited attention to Rules 26A & 27 of the Delhi Sales Tax Rules, 1975 prescribing the procedure for issuance of the Recovery Certificate. Therefrom it is contended that it is the Assessing Officer of the Sales Tax who issues the Recovery Certificate.

Since it is the contention of the Petitioner that he has never been heard, it has been further enquired from the counsel for the Respondents as to whether any opportunity of hearing was given to the Petitioner before issuance of the Recovery Certificate. The counsel states that notice was issued to one Mr. Ashish Bhaskar, Director of the said Company and who submitted a reply containing a list of Directors at the relevant time and in which the name of the Petitioner was also mentioned. It is stated that Recovery Certificates against all the persons so disclosed in the said list to be the Directors were issued.

From the aforesaid it is borne out that no opportunity has been given to the Petitioner by the Assessing Officer who has issued the Recovery Certificate being executed by the Respondent No. 1 Assistant Collector, till now.

In the aforesaid circumstances, no purpose will be served in keeping the present writ petition pending. The same is disposed of with the following directions:

(i) The Petitioner to appear before the Assessing Authority concerned of Ward-87, Department of Trade & Taxes, 9th Floor, Vyapar Bhawan, I.P. Estate, New Delhi on 20th April, 2011 at 1100 hours in the morning and on such subsequent dates as may be given/necessary with all documents to show his involvement/non-involvement in the aforesaid M/s Ishwar Industries Ltd. in the Financial Year 1983-84 to which the demand is stated to relate.

(ii) The Assessing Officer after so hearing the Petitioner shall pass a speaking order justifying the liability if any of the Petitioner and recording the reasons if holding the Petitioner liable for the arrears with respect to that year.

(iii) The aforesaid order shall be passed on or before 31st May, 2011.

(iv) Till then the proceedings by the Assistant Collector against the Petitioner shall remain suspended.

(v) If the Assessing Officer holds the Petitioner liable, the Recovery Certificate already issued will be executable thereafter. However, in the event of the Assessing Officer after hearing the Petitioner, holding the Petitioner to be not liable for the arrears, the Recovery Certificate issued in the name of the Petitioner shall stand quashed.

No order as to costs.

Copy of this order be given Dasti under signature of the Court Master.