Krishan Gopal Sharma vs Collector-Cum Dy. Excise And Taxation … on 17 July 2006

Delhi High Court
Krishan Gopal Sharma vs Collector-Cum Dy. Excise And Taxation … on 17 July, 2006
Author: Anil Kumar
Bench: Anil Kumar
JUDGMENT

Anil Kumar, J.

Page 2727

1. The petitioner has impugned enforcement of liability of M/s. Haryana Transmissions Limited under the State and Central Sales Tax Act against him contending that as a director he is not liable and has sought quashing of notice dated 27th October,2004 issued by Assistant Collector, Kanjhawala. The petitioner is stated to be a Director of M/s.Haryana Transmissions Limited, a company which was granted exemption from sales tax. The exemption for sales tax later on was, however, withdrawn by General Manager, DIC, Bahadur Garh by order dated 22nd April, 1999. Thereafter, the orders were passed under Haryana General Sales Tax Act, 1973 by ETO-cum-Assessing Authority, Rohtak. In revision, Deputy Excise and Taxation Commissioner-cum-Revisional Authority, Jhajjar, directed to issue TDN and challan for Rs.1,65,839/- and by order dated 29th March, 2001 after cancellation of exemption from sales tax proceedings, initiated recovery against Haryana Transmissions Limited. The Assessing Authority, Excise and Taxation Officer-cum-AA, Bahadurgarh, therefore, issued notice for recovery of Rs.3,87,144/- and for recovery of the said amount, the recovery notice dated 27th October, 2004 has been issued against the petitioner also as Director of Haryana Transmissions Limited by Assistant Collector, Kanjhawala, Delhi, which is impugned by the petitioner.

2. What is relevant before considering the merits of the petition is that the petitioner had also filed a suit for permanent injunction on 4th March, 2005 challenging the said notice which is impugned in this petition also contending, inter alia, that he was one of the Directors of M/s.Haryana Transmissions Limited which company was given incentive of exemption from sales tax (both Central Sales Tax as well as State Tax) for a period of 10 years from the commencement of business on being found eligible by letter dated 15th March, 1996 and an exemption certificate dated Page 2728 25th July, 1996 was issued by Deputy Excise and Taxation Commissioner, Rohtak. M/s Haryana Finance Corporation is contended to have taken over the possession of the unit by putting its lock on the company premises at Bahadurgarh on 10th January, 1997 and since then the company premises is lying locked and the petitioner and other Directors have moved the court at Chandigarh for filing the appropriate proceedings. In the suit for permanent injunction, it was also contended that respondent No. 1 had ordered recovery of Rs.16,82,480/- with retrospective effect for the period 1994-1997 despite the company doing big business and having exemption from the sales tax and the recovery notice dated 27th October, 2004 (which is also challenged in the present writ petition) is a result of harassment to the petitioner, as petitioner cannot be proceeded against personally because the Director of a limited company is not liable personally for the amounts due from the company on account of State or Central Sales Tax and the petitioner is apprehending attachment of his personal properties and his detention in the custody, etc., at the hands of respondent No. 3 for recovery proceedings. The suit filed by the petitioner was contested and issues were framed and after considering the contentions of the parties, the learned Additional District Judge by order dated 19th April, 2006 rejected the plaint under Order VII Rule 11 (d) of the Code of Civil Procedure on the ground that under Section 62 of the Haryana General Sales Tax Act, 1973, the jurisdiction of the civil court is barred to entertain the case as the petitioner had sought relief for permanent injunction against the recovery of sales tax assessed and to be collected by Deputy Excise and Taxation Commissioner, Haryana. The learned Counsel for the petitioner contended that he is not impugning the judgment dated 19th April, 2006 passed by the learned Additional District Judge rejecting the plaint of the petitioner and dismissing the suit in the present writ petition but he is again impugning the notice dated 27th October, 2004 issued by Assistant Collector, Kanjhawala, Delhi in the present writ petition.

3. The learned Counsel for the petitioner has relied on , Kusum Ingots and Alloys Ltd. v. Union of India and Anr. , Oil and Natural Gas Commission v. Utpal Kumar Basu and Ors. , State of Uttar Pradesh and Ors. v. Dr. Vijay Anand Maharaj (1987) 67 Sales Tax Cases 388, Tikam Chand Jain v. State Government of Haryana and Anr. to contend that the cause of action has also arisen in Delhi and therefore the writ petition against the notice dated 27th October,2004 is maintainable.

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4. A competent Civil Court has already held that the suit for permanent injunction is not maintainable and has rejected the plaint under Order VII Rule 11 (d) of the Code of Civil Procedure. The petitioner has not challenged this order rejecting his plaint which is also annexed with the writ petition but which has not been challenged. While rejecting the plaint the Learned Additional District Judge has also held that the remedy if any of the petitioner is to approach the High Court at Punjab and Haryana in compliance with the provision of Section 62 of Haryana Sales Tax Act.

5. The learned Counsel for the petitioner very emphatically contended that the scope of cause of action under Article 226 of the Constitution is different from the cause of action in the suit for permanent injunction and therefore, this Court must interfere and stay the recovery of the amount of Sales Tax from the Company against one of its Director, petitioner, as there is no personal liability of a Director of a company for the amounts due from the company. The amounts recoverable from a company can be recovered from the Director in certain circumstances e.g. if the director has stood guarantor or surety or if the director has the assets of the company. Petitioner can not contend that in no case the amount due from the company can be recovered from one of the Directors. In any case such disputed facts may not be determined in the writ petition under Article 226 of the Constitution of India especially after the petitioner filed a suit for permanent injunction which has been rejected on the ground that the Court does not have jurisdiction and the High Court of Punjab and Haryana will have jurisdiction under Section 62 of the Haryana Sales Tax Act and which order has not been challenged by the petitioner.

6. The Judgment relied on by the petitioner are of no help to him. These judgments have held about the cause of action under Article 226 of the Constitution of India. In Dr. Vijay Anand Maharaj (Supra) it was held by the Apex Court that jurisdiction to issue writ under Article 226 is original jurisdiction as distinguished from appellate or revisional jurisdiction. It was described as extraordinary original jurisdiction holding that the petition under Article 226 was not a continuation of proceedings under the U.P Act (XIV of 1956). Similarly in ONGC (Supra) relied on by the petitioner it was held that the question whether a High Court has territorial jurisdiction to entertain a writ petition must be answered on the basis of the averments made in the petition, the truth or otherwise whereof being immaterial which is to be decided on the basis of the facts pleaded in the petition. In Kusum Ingots and Alloys Ltd (Supra) the apex Court again held that where an appellate/revisional order is passed, such a place Page 2730 may give rise to a part of cause of action although the original order was given at a place outside the area where the appellate/revisional order was passed.

7. In the present facts and circumstances it is not disputed that the orders were passed for recovery of sale tax in the State of Haryana pursuant to which recovery is sought from the petitioner. Without going into and deciding the question whether this Court has jurisdiction or not what is material is that the petitioner had filed a suit for permanent injunction raising the same questions where a finding has been given to reject the plaint on the ground that the civil Court in Delhi does not have jurisdiction. Without challenging that order, the petitioner wants to re-agitate the same issues in the present writ petition. Another matter relied on by the petitioner Tikam Chand Jain (Supra) holding that there is no provision in sales tax law which makes the director of a limited company liable personally for amounts due from the company on account of State tax or Central sales tax by a single Judge of High Court of Punjab and Haryana at Chandigarh may not be relevant in the present facts and circumstances. Once a civil remedy has been availed by the petitioner and suit for permanent injunction has been rejected, it will not be appropriate for this Court to interfere in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India.

8. In the present case, even if this Court has cause of action, it can not and should not exercise its jurisdiction on account of a remedy under Civil Law already availed by the petitioner challenging the same notice dated 27th October,2004 on the same grounds which are agitated in the present petition. The judgment passed by the competent Civil Court rejecting the plaint of the petitioner for permanent injunction has not been challenged by the petitioner.

9. In the circumstances, it will not be appropriate for this Court to exercise its jurisdiction, even if it has jurisdiction and cause of action has arisen as alleged by the petitioner. Therefore, in totality of facts and circumstances the writ petition is dismissed.