NITINBHAI BALCHANDAS GAJJAR vs. ASSISTANT COMMISSIONER OF COMMERCIAL TAX

Facts

The petitioner, Nitinbhai Balchandas Gajjar, filed a writ application challenging an order dated 14/07/2015 by the Assistant Commissioner of Commercial Tax, Unjha, attaching his self-acquired property for tax arrears of his son, who was a registered dealer under the Gujarat Value Added Tax Act, 2003. The son's dealership was initially cancelled due to non-filing of returns and non-payment of taxes, but was later restored by the Gujarat Value Added Tax Tribunal. A search was conducted at the dealer's premises, and provisional assessment orders were passed for multiple years, resulting in a significant VAT liability, penalties, and interest. Subsequently, the Mamlatdar, Kadi, issued a notice on 03/08/2015, creating a charge on the petitioner's property. The petitioner argued he was neither a dealer nor an agent and his self-acquired property could not be attached for his son's dues.

Held

The High Court held that the self-acquired property of the writ applicant, who is neither a dealer nor an agent, could not be attached for recovering dues payable by the dealer under the Gujarat Value Added Tax Act, 2003. The Court reasoned that the definition of 'dealer' under Section 2(10) of the Act does not encompass the father of a dealer. Furthermore, interpreting Section 44 of the Act, which deals with special modes of recovery, the Court found that the term 'other person' refers to someone from whom money is due to the dealer or who holds money for the dealer. The petitioner did not fall within this definition. The Court noted that the property attached was the self-acquired property of the petitioner, and there was no provision in the Act to fasten the liability of the dealer upon the father of the dealer. Consequently, the attachment notice and the charge created on the property were quashed and set aside, with directions to remove the mutation entry and any encumbrance. The respondents were at liberty to proceed for recovery from the dealer.

Key Issues

1. Whether the self-acquired property of the writ applicant, who is neither a dealer nor an agent, could be attached for recovering dues payable by the dealer under the Gujarat Value Added Tax Act, 2003? Assessee's Arguments: The petitioner contended that he is neither a dealer nor an agent as defined by Section 2(1) of the Act. He argued that his property, which is self-acquired and purchased via a registered sale deed, cannot be attached for the alleged tax dues of his son, the dealer. He asserted no connection to the dealer's business beyond a blood relation. Revenue's Arguments: The revenue argued that the impugned order was just, legal, and proper. They contended that the petitioner was present during the raid and had given a statement that he was the owner of the factory and the dealer was his legal heir. However, the revenue fairly conceded that the petitioner was not the dealer as per Section 10(2) of the Act and not the owner of the residential premises and factory.