Facts of the case
In respect of outstanding dues of the HUF, an order of attachment came to be passed by the Commercial Tax Officer under section 45 of the Gujarat Value Added Tax, 2003 (hereinafter referred to as ‘the GVAT Act’) attaching the properties of Shilpaben P Shah, wife of the karta of the HUF.
The legislature having treated a Hindu Undivided Family as a taxable entity, distinct from the individual members constituting it, it was not open for the appellant to attach the movable properties of an individual member. In this regard, reference may be made to the decision of the Supreme Court in the case of Kapurchand Shrimal v. TRO AIR 1969 SC 682,
The property of the individual member of the Hindu Undivided Family could not be attached under section 45 of the GVAT Act.
HIGH COURT OF GUJARAT
State of Gujarat
Jwelly Tea Co.
TAX APPEAL NO. 751 OF 2015
CIVIL APPLICATION (OJ) NO. 679 OF 2015
OCTOBER 16, 2015
Ms. Maithili Mehta, Asstt. Govt. Pleader for the Appellant. Manish K. Kaji, Adv. for the Respondent.
Ms. Harsha Devani, J. – The appellant – State of Gujarat has challenged the order dated 25th March, 2015 passed by the Gujarat Value Added Tax Tribunal at Ahmedabad (hereinafter referred to as ‘the Tribunal’) in Second Appeal No.1056 of 2014 by proposing the following two questions, stated to be substantial questions of law:
|“(1)||Whether the Hon’ble Tribunal has erred in law and in facts in holding that the property was acquired by the member and not by the HUF?|
|(2)||Whether the Hon’ble Tribunal has erred in law and in facts in holding that the liability of members of HUF is not joint and several?”|
2. The facts giving rise to the present appeal are that M/s Jwelly Tea Co., an HUF, is a dealer duly registered under the provisions of the Gujarat Sales Tax Act, 1969. In respect of outstanding dues of the HUF, an order of attachment came to be passed by the Commercial Tax Officer under section 45 of the Gujarat Value Added Tax, 2003 (hereinafter referred to as ‘the GVAT Act’) attaching the properties of Shilpaben P Shah, wife of the karta of the HUF. The assessee carried the matter in appeal before the first appellate authority, which dismissed the appeal on merits. The assessee carried the matter in second appeal before the Tribunal and succeeded.
3. Ms. Maithili Mehta, learned Assistant Government Pleader, assailed the impugned order by submitting that the Tribunal has erred in not appreciating that the liability of the members of the Hindu Undivided Family is joint and several. Accordingly, even if the property belongs to a member and not to the HUF, the same can be attached towards the dues of the HUF inasmuch as each member of the HUF would be liable for its dues. Reference was made to section 57 of the GVAT Act which makes special provision regarding liability to pay tax in certain cases and more particularly, sub-section (2) thereof, as well as to section 58 thereof, which makes provision for liability in other cases and more particularly to sub-section (1) thereof, to submit that in the light of the provisions of sections 57 and 58 of the Act, the Commercial Tax Officer was justified in attaching the property under section 45 of the GVAT Act.
4. On the other hand, Mr. Manish Kaji, learned advocate for the respondent supported the impugned order by submitting that the Tribunal has duly considered the facts of the case and recorded a finding of fact to the effect that the property which is sought to be attached under section 45 of the GVAT Act is the property of Shilpaben P. Shah, wife of the karta of the HUF, which has been purchased by her out of the amounts gifted to her by her father, mother and brothers, and is in the nature of streedhan. It was submitted that the present case does not fall within the ambit of sections 57 or 58 of the Act and therefore, the Tribunal did not commit any error in holding that the property in question could not have been attached. Accordingly, the appeal being devoid of merits deserved to be dismissed.
5. The facts as emerging from the record reveal that the respondent, a registered dealer, is an HUF. Property belonging to the wife of the karta of the HUF came to be attached under section 45 of the GVAT Act in connection with the outstanding dues of the HUF. The Tribunal, in the impugned order has recorded a finding of fact to the effect that the flat stood in the name of one Bhanuben Shantilal which was transferred in favour of Shilpaben P. Shah on 29thApril, 1998. The price of the property paid by Shilpaben P. Shah was Rs.4,65,000/-. Such amount was gifted to Shilpaben P. Shah by her father – Amichandbhai Sanghvi and brothers, Minesh, Mehul and Vipul, who had issued drafts of Rs.1,07,477/-, Rs.30,000/-, Rs.30,000/- and Rs.2,20,000/- respectively and the remaining amount was paid by her mother. The facts, therefore, clearly show that the flat stood in the name of the wife of the karta of the HUF.
6. In the aforesaid factual background, reference may be made to the provisions of section 45 of the GVAT Act, which makes provision for provisional attachment and lays down that during the pendency of the proceedings of assessment or reassessment of turnover escaping assessment the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary to do so, he may by order in writing attach provisionally any property belonging to the dealer in such manner as may be prescribed. Sub-section (2) thereof provides that every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1) of section 45. On a plain reading of sub-section (1) of section 45 of the GVAT Act, it is clear that for the purpose of protecting the Government revenue, the Commissioner can attach provisionally, any property belonging to the dealer. In the facts of the present case the dealer is an HUF and it is an admitted position that the property in question does not belong to the dealer. Evidently, therefore, the provisions of section 45 could not have been resorted to in the facts of the present case.
7. Insofar as the provisions of sections 57 and 58 of the GVAT Act are concerned, sub-section (2) of section 57 which is relevant for the present purpose provides that where a dealer, liable to pay tax under the Act is a Hindu Undivided Family and the property of the Hindu Undivided Family is partitioned amongst the various members or groups of members then, each member or group of members shall jointly and severally be liable to pay the tax, interest or penalty due from the dealer under the Act. Therefore, sub-section (2) of section 57 of the GVAT Act provides that the members of Hindu Undivided Family would be liable to discharge the tax liability of Hindu Undivided Family in case where the property of the Hindu Undivided Family is partitioned amongst them. However, it is no one’s case that the properties of the Hindu Undivided Family have been partitioned amongst its members so as to make the wife of the Karta of the HUF liable for its tax liability. As regards the provisions of section 58 of the GVAT Act, the condition precedent for invocation thereof is the discontinuance of the business of Hindu Undivided Family. In the present case it is not the case of the respondent that the Hindu Undivided Family has discontinued the business. Under the circumstances, the question of invocation of section 58 of the GVAT would also not arise. Besides, both sections 57 and 58 of the GVAT Act envisage crystallised liabilities and cannot be invoked during the pendency of the assessment proceedings.
8. Another aspect of the matter is that the expression ‘dealer’ has been defined under section 2(10) of the Act to mean any person who, for the purpose of or consequential to his engagement in or, in connection with or incidental to or in the course of his business buys, sells, manufactures, makes supplies or distributes goods for cash or for commission, remuneration or otherwise, which means any person who satisfies the requirement of that sub-section. Sub-section (15) of section 2 of the GVAT Act defines ‘person’ to include an individual, a joint family or Hindu Undivided Family, etc. Therefore, the Act recognises a Hindu Undivided Family as a dealer and as a person. The legislature having treated a Hindu Undivided Family as a taxable entity, distinct from the individual members constituting it, it was not open for the appellant to attach the movable properties of an individual member. In this regard, reference may be made to the decision of the Supreme Court in the case of Kapurchand Shrimal v. TRO AIR 1969 SC 682, wherein the court has held as under:
“5. The scheme of the Income-tax Act, 1961, is to treat the assessee failing to pay the tax due within the period prescribed a defaulter. The Income-tax Officer may, where the assessee is found to be in default, issue a certificate for recovery and forward it to the Tax Recovery Officer specifying the amount of arrears due from the assessee. The amount due may be recovered by resort to any one or more of the four modes prescribed by Sec. 222 of the Act. If the defaulter fails to comply with a notice issued by the Tax Recovery Officer requiring the defaulter to pay the amount within fifteen days from the date of the service of the notice, proceedings for recovery may be taken against the assessee for recovery of the tax. But under the scheme of the Act and the Rules, the assessee alone may be treated in default. The Act and the Rules contemplate that the notice for payment of the tax arrears may be issued against the assessee, and proceedings for recovery of the tax may be taken against the assessee alone. Under the Income-tax Act, 1961, a Hindu Undivided Family is a distinct taxable entity, apart from the individual members who constitute that family. Section 4 of the Income-tax Act charges to tax for any assessment year the total income of the previous year of every person and ‘person’ is defined in Section 2(31) as including- (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or a body of individuals, whether incorporated or not, (vi) a local authority, and (vii) every artificial juridical person, not falling within any of the preceding sub-clauses. The Legislature having treated a Hindu undivided family as a taxable entity distinct from the individual members constituting it, and proceedings for assessment and recovery tax having been taken against the Hindu undivided family, it was not open to the Tax Recovery Officer to initiate proceeding against the manager of the Hindu undivided family for his arrest and detention. It is true that if properties of the family, movable and immovable, are to be attached proceedings may be started against the Hindu undivided family and the manager represents the family in proceedings before the Tax Recovery Officer. But by the clearest implication of the statute the assessee alone may be deemed to be in default for non-payment of tax, and liability to arrest and detention on failure to pay the tax due is also incurred by the assessee alone. The manager by virtue of his status is competent to represent the Hindu undivided family, but on that account he cannot for the purpose of Section 222 of the Act of 1961 be deemed to be the assessee when the assessment is made against the Hindu undivided family and certificate for recovery is issued against the family.”
9. Having regard to the principles enunciated in the above decision as well as in the light of the above discussion, this court is of the view that the Tribunal was wholly justified in holding that the property of the individual member of the Hindu Undivided Family could not be attached under section 45 of the GVAT Act. The impugned order passed by the Tribunal does not suffer from any legal infirmity so as to give rise to any question of law, much less a substantial question of law, warranting interference. The appeal, therefore, fails and is accordingly dismissed.
10. It may also be noted that the initial attachment order was for a period of six months. The learned Assistant Government Pleader has stated under instructions that the attachment has not been extended thereafter and hence, the attachment is no longer effective.
OJ Civil Application No.679 of 2015:
In light of the order passed in the main appeal, this application for stay does not survive and stands disposed of accordingly.