VEER INDUSTRIES LTD. vs. THE COMMERCIAL TAX OFFICER(4)

Facts

The writ applicant, Veer Industries Ltd., challenged orders dated January 23, 2018, and May 14, 2018, which attached its property for the tax dues of respondent no. 3 company. The applicant owns land leased to respondent no. 3 since August 12, 2010. This is not the first time the applicant's property was attached for respondent no. 3's dues; a previous attachment order from February 24, 2015, was challenged and disposed of as lapsed after one year. The applicant contended that it and respondent no. 3 are separate legal entities and its property cannot be attached for respondent no. 3's tax liabilities under Sections 46, 47, and 48 of the Gujarat Value Added Tax Act. The applicant also argued that its objections were not considered and the order was non-speaking. The revenue argued that the term "other person" in Section 46 of the Act encompasses the applicant.

Held

The High Court allowed the writ application, quashing and setting aside the impugned orders dated January 23, 2018, and May 14, 2018. The Court held that the property of the writ applicant, Veer Industries Ltd., could not be attached for the tax dues of respondent no. 3 company. The Court reasoned that the writ applicant and respondent no. 3 are separate legal entities, and the Gujarat Value Added Tax Act, 2003, does not contain any provision to fasten the sales tax dues of a private limited company onto the personal property of its director or lessor. The Court clarified that while the land belongs to the writ applicant, the plant and machinery belong to respondent no. 3. Therefore, the plant and machinery of respondent no. 3 could be attached, but the land owned by the writ applicant could not. The Court also noted that no charge could be created in favor of the State Government on the writ applicant's land, and no revenue entry should have been mutated in that regard. The Court explicitly stated that the controversy was squarely covered by previous decisions, including M. R. Chokshi v. State of Gujarat. Other contentions were not addressed due to this settled position of law.

Key Issues

1. Whether the property of the writ applicant, a separate legal entity, can be attached for the tax dues of respondent no. 3 company under Sections 46, 47, and 48 of The Gujarat Value Added Tax Act, 2003? (Question of law) Assessee's Contention: The writ applicant argued that as a separate legal entity, its property cannot be attached for the tax dues of respondent no. 3. It relied on the principle that a company and its directors/lessors are distinct and that the Act does not provide for fastening the liability of a company's tax dues onto its director or lessor. The applicant also argued that its objections were not considered, rendering the order non-speaking. Revenue's Contention: The revenue, represented by the Assistant Government Pleader, argued that the term "other person" in Section 46 of the Act, when read in conjunction with Section 44, could include the writ applicant, implying that the applicant's property could be subject to attachment for the dues of respondent no. 3.