Cheriyan J. Puthiyadam v. State of Kerala and others

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE N.NAGARESH THURSDAY, THE 04TH DAY OF MARCH 2021 / 13TH PHALGUNA, 1942** **WP(C).No.1760 OF 2010(T)** ## **PETITIONER:** **CHERIYAN J.PUTHIYADAM, S/O.JOHN, AGED 75 YEARS, PUTHIYADAM HOUSE, ANTHINAD, LALAM VILLAGE, PALAI, KOTTAYAM DISTRICT.** **BY ADVS. SRI.KURIAN GEORGE KANNANTHANAM (SR.) SRI.TONY GEORGE KANNANTHANAM SRI.THOMAS GEORGE** ## **RESPONDENTS:** |**1**|**STATE OF KERALA,**| |---|---| ||**REP. BY ITS SECRETARY TO GOVERNMENT,**| ||**DEPT. OF REVENUE,**| ||**GOVT. SECRETARIAT,**| ||**THIRUVANANTHAPURAM.**| |**2**|**THE DISTRICT COLLECTOR,**| ||**COLLECTORATE,**| ||**KOTTAYAM.**| |**3**|**THE TAHSILDAR,**| ||**MEENACHIL TALUK,**| ||**MEENACHIL,**| ||**KOTTAYAM DISTRICT.**| |**4**|**THE VILLAGE OFFICER,**| ||**KONDOOR VILLAGE,**| ||**MEENACHIL TALUK,**| ||**KOTTAYAM DISTRICT.**| |**5**|**SOUTH INDIAN BANK REP. BY ITS BRANCH**| ||**MANAGER, KANJIRAPPALLY BRANCH,**| ||**KOTTAYAM DISTRICT.**| WP(C) No.1760/2010 : 2 : - **6 THOMAS MATHEW, KAROTTEMBRAYIL HOUSE, SANTHAMPARA P.O., IDUKKI DISTRICT.** - **7 K.S.SCARIA, POTTAMKULAM HOUSE, KALAKETTY P.O., KOTTAYAM DISTRICT.** - **8 THE LAND REVENUE COMMISSIONER, GOVERNMENT OF KERALA, LAND REVENUE COMMISSIONERATE, THIRUVANANTHAPURAM.** **R1 BY GOVERNMENT PLEADER R7 BY ADV. SMT.R.BINDU R5 BY ADV. SRI.K.S.CHACKOCHAN R7 BY ADV. SRI.HARISH GOPINATH R7 BY ADV. SRI.R.S.KALKURA R1 BY ADV. SRI.M.S.KALESH R7 BY ADV. SRI.K.KURIAN KOSHY R5 BY ADV. SRI.P.R.MILTON R1 BY ADV. SMT.A.V.PRIYA R6 BY ADV. SMT.PREETHY R. NAIR R6 BY ADV. SRI.M.RAMASWAMY PILLAI R7 BY ADV. SRI.SANIL KUNJACHAN R5 BY ADV. SRI.GEORGE VARGHESE,SC, SOUTH INDIAN BANK SPL. GOVERNMENT PLEADER FOR REVENUE ADV M.L. SAJEEVAN** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 04-03-2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** WP(C) No.1760/2010 : 3 : ## **[CR]** ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ _**Dated this the 4[th] day of March, 2021**_ The petitioner is before this Court seeking to quash Exts.P15 and P21 proceedings of the 8[th] and 1[st] respondents respectively and to command the 1[st] respondent and its instrumentalities including respondents 2 to 4 not to interfere with the free possession and enjoyment of the property of the petitioner purchased as per Ext.P9 deed from the 5[th] respondent and cultivated with rubber and pineapple. 2. Events leading to the filing of this writ petition, chronologically, are as follows:- The Rubber Board granted to the 6[th] respondent Ext.P1 Dealers licence dated 20.02.1985. On 02.01.1986, the 6[th] respondent gave a Power of Attorney to the 7[th] respondent to WP(C) No.1760/2010 : 4 : carry out certain transactions under the licence. At that time, the 7[th] respondent was indebted to the 5[th] respondent-South Indian Bank in his personal capacity. The 5[th] respondent-Bank had filed OS No.403/1986 in the Principal Sub Court, Kottayam, against the 7[th] respondent in the year 1986. 3. The Rubber Board cancelled the licence issued to the 6[th] respondent on 09.01.1987 as per Ext.P2, with effect from 15.01.1987. Subsequently, the Rubber Board, as per Ext.P3, granted Dealers licence to the 6[th] respondent again on 12.04.1989 for the period ending on 31.03.1992. The 6[th] respondent had cancelled the Power of Attorney given to the 7[th] respondent as per Ext.P4 revocation letter dated 02.07.1989. Thereupon, the 7[th] respondent returned all documents including the Rubber Board licence to the 6[th] respondent on 15.07.1989, which was acknowledged by the 6[th] respondent as per Ext.P5. The 7[th] respondent himself obtained Dealers licence from the Rubber Board on 10.07.1989, the validity of which was later extended upto 31.03.1990. WP(C) No.1760/2010 : 5 : 4. In the meanwhile, the Principal Sub Court, Kottayam passed Ext.P7 money decree in OS No.403/1986 in favour of the 5[th] respondent-Bank and against the 7[th] respondent. 5. The State of Kerala amended the Kerala General Sales Tax Act,1963 inserting Section 19C, as per Act 3 of 1990. Section 19C provided for protective assessment and enabled the Assessing Authority to recover sales tax from any person carrying on business as agent, employee, manager, power of attorney holder, guarantor or in any other capacity, in the name or in association with a registered dealer. Section 19C inserted in the year 1990 was given retrospective effect from 29.08.1989. In exercise of Section 19C, the Sales Tax authorities served a notice of recovery dated 27.08.1991 on the 7[th] respondent under Section 34 of the Revenue Recovery Act for realising defaulted sales tax dues of the 6[th] respondent. The land of the 7[th] respondent in Survey No.1921/1 of Kondoor Village was attached on 30.12.1991 and was notified for sale. On 11.02.1992, the Government of Kerala itself WP(C) No.1760/2010 : 6 : ## bought the property in auction. 6. Before the said bought-in-auction was confirmed in favour of the Government, on 22.12.1994, the Principle Sub Court Court, Kottayam auctioned the very same property of the 7[th] respondent in execution of Ext.P7 decree. The 5[th] respondent-Bank purchased the property in auction. The sale in favour of the 5[th] respondent-Bank was confirmed on 21.02.1995. Subsequently, on 31.05.1995, the land purchase made by the State by way of buy-in, was confirmed. The Court issued an Auction Certificate to the Bank on 31.01.1996 and the Bank took possession of the property on 27.11.1996. The Bank remitted land tax and submitted an application for transfer of registry in February,1998. The learned Government Pleader contends that the Government took custody of the property on 05.09.2000. 7. On 18.09.2001, the 5[th] respondent-Bank sold the property to the petitioner by way of Ext.P9 sale deed registered in SRO, Erattupetta. The Revenue Authorities refused to effect transfer of registry in favour of the petitioner, WP(C) No.1760/2010 : 7 : in view of the auction conducted by the Sales Tax authorities. The petitioner hence filed W.P.(C) No.10661 of 2002 before this Court. A learned Single Judge dismissed the writ petition as per Ext.P12, holding that the petitioner will have to establish his rights through a properly constituted civil suit. The petitioner filed W.A. No.2728 of 2007 against Ext.P12 judgment. A Division Bench of this Court, by Ext.P13 judgment, held that the petitioner can establish his rights through appropriate Forum. 8. The petitioner thereupon filed a revision petition against the auction sale conducted by the Sales Tax authorities on 11.02.1992, in which the State had bought the property in auction. The Commissioner of Land Revenue by Ext.P15 order dated 04.06.2008 dismissed the revision petition filed by the petitioner. The petitioner preferred Ext.P16 appeal dated 01.07.2008 to the Government. By Ext.P21 order dated 10.09.2009, the Government rejected the appeal filed by the petitioner. The petitioner is before this Court challenging Ext.P15 order of the Land Revenue WP(C) No.1760/2010 : 8 : Commissioner and Ext.P21 order of the Government of Kerala. 9. Respondents 2 to 4 filed counter affidavit denying the contention of the petitioner that the Power of Attorney given by the 6[th] respondent in favour of the 7[th] respondent was cancelled on 01.07.1989. According to respondents 2 to 4, the 7[th] respondent operated the bank account of the 6[th] respondent till 13.03.1990 on the basis of the Power of Attorney given by the 6[th] respondent. The 7[th] respondent closed the Current Account only on 05.04.1990. Ext.R2(c) Notice was issued to respondents 6 and 7 to produce books of accounts for the period 1985-'86 to 1989-'90, which was not done. Hence, Ext.R2(d) Assessment Order was passed. According to the respondents, Section 19C is retroactive and termination of Power of Attorney on a subsequent date will not absolve the liability of the Power of Attorney holder. The property of the 7[th] respondent was therefore rightly taken over by the Government. The petitioner allegedly purchased the property much later, from the Bank. The said sale has no legal WP(C) No.1760/2010 : 9 : validity. The petitioner is trying to evade payment using a pre-dated document, Ext.P7. 10. The 5[th] respondent-Bank in their counter affidavit stated that the decree obtained by the Bank on 30.09.1987 against the 7[th] respondent is valid. In execution of the said decree, the property was auctioned and the 5[th] respondentBank bid the same in auction. Ext.P8 Sale Certificate was issued in favour of the Bank. The property was given delivery to the Bank on 27.11.1996 by the Court Amin. The priority to recover sales tax arrears was introduced in the KGST Act by Section 26B, which came into force with effect from 01.04.1999. On that day, the 7[th] respondent had no title over the property. The decree of the court which was made prior to introduction of Section 26B of the KGST Act, is legal and valid. 11. The 6[th] respondent filed a counter affidavit. The 6[th] respondent stated that the 7[th] respondent was misusing the Power of Attorney given by him and hence the Power of Attorney was cancelled on 02.07.1989 as per Ext.P4. In his counter affidavit, the 7[th] respondent also stated that the Power WP(C) No.1760/2010 : 10 : of Attorney was terminated on 02.07.1989. 12. Learned counsel for the petitioner argued that Section 19C of the KGST Act enabling protective assessment came into the statute book in 1990, with effect only from 29.08.1989. As on the said date, the 7[th] respondent was not Power of Attorney holder of the 6[th] respondent. Hence, the 7[th] respondent could not have been mulcted with any liability on the basis of a Power of Attorney earlier held by him. Assuming without conceding that Section 19C applies, even then an independent tax assessment on the 7[th] respondent ought to have been made before proceeding against the properties of the 7[th] respondent under the Revenue Recovery Act, 1968 as Section 19C of the KGST Act, 1963 contemplates assessment of “such other person”. 13. The learned Senior Counsel further pointed out that even going by the definition of defaulter contained in Section 2(e) of the Revenue Recovery Act and Section 34 thereof, assessment of the defaulter and fixation of liability is indispensable. There was no such assessment or fixation of WP(C) No.1760/2010 : 11 : liability on the 7[th] respondent under the Revenue Recovery Act. Therefore, attachment and sale of the property of the 7[th] respondent are invalid. 14. The learned Government Pleader representing respondents 1 to 4 and 8, vehemently opposed the petition and contended that the Government had taken possession of the property and the usufructs were auctioned by the Government. The petitioner had earlier filed OP No.32424 of 2001, which was withdrawn. Going by the language of Section 19C of the KGST Act, past liability can also be fastened on the Power of Attorney Holder of a Dealer. 15. The Government Pleader pointed out that the liability being towards tax and state revenue, the State will have an overriding first charge over the property of the 7[th] respondent. The learned Government Pleader emphatically denied the claim of the petitioner that the Power of Attorney of the 7[th] respondent was terminated on 02.07.1989. The said cancellation of Power of Attorney is found to be incorrect based on the bank account transactions made by the Seventh WP(C) No.1760/2010 : 12 : respondent even after 02.07.1989. At any rate, the issues involved are disputed questions of fact, which this Court cannot adjudicate under Article 226 of the Constitution of India, contended the learned Government Pleader. 16. Relying on the judgments of this Court in _**K. P. Hamsa and others v. Assistant Commissioner of Sales Tax and others** [2008 (3) KLT 180]_ and _**Lucy Vincent v. District Collector** [2008 (4) KLT 876]_ , the learned Government Pleader argued that where during the pendency of any proceedings under the KGST Act any assessee creates a charge on any of his assets, such charge shall be void as against any claim in respect of any tax payable by the assessee. It is not necessary that the assessment should be completed. It is also not necessary that a demand should be made to the assessee, contended the learned Government Pleader. 17. Relying on the judgment of a Division Bench of this Court in _**South Indian Bank Ltd. v. State of Kerala** [2006 (1) KLT 65]_ , the Government Pleader argued that the decree WP(C) No.1760/2010 : 13 : obtained by Bank will not have precedence over the first charge created in favour of the State. 18. Learned Government Pleader pointed out that in _**Jaya v. State of Kerala** [2005 (2) KLT 543]_ , a Division Bench of this Court has held that even if the transfer of property is effected much before service of demand on defaulter, still if the transfer is effected with an intent to defeat or delay the creditors, such transfer will be invalid. A Division Bench of this Court has held in _**State of Kerala v. Rajmohan Cashew (P) Ltd.** [2005 (2) KLT 131]_ that in the matter of recovery of sales tax from defaulters, the State will have priority over equitable mortgages created in favour of banks and financial institutions, contended the learned Government Pleader. 19. Learned Government Pleader urged that statutory creation of such first charge in favour of the State, is _eo-instanti,_ as held by this Court in _**P.S. Basheer and others v. Pearl Food Products and others** [2006 (2) KLT 346]_ . The liability to pay tax is automatic and depends only upon the charging section. It does not depend upon the adjudication as WP(C) No.1760/2010 : 14 : to the liability to tax, followed by the issuance of any assessment order and demand, and it was so held by this Court in _**Noushad Abbas and others v. Commissioner of Commercial Taxes, Thiruvananthapuram and others** [2013 (3) KLJ 773]._ 20. The learned Government Pleader, relying on the judgment of the Apex Court in _**Orissa Agro Industries Corporation Limited and others v. Bharati Industries and others** [(2005) 12 SCC 725],_ argued that writ petition is not maintainable in view of the disputed questions of fact involved in this case. 21. I have heard learned Senior Counsel assisted by the counsel appearing for the petitioner, learned Government Pleader representing respondents 1 to 4, learned Standing Counsel appearing for the 5[th] respondent-Bank and the learned counsel appearing for respondents 6 and 7. 22. On appreciation of the pleadings in the case and arguments of the counsel on either side, this Court finds that the following questions arise for consideration:- WP(C) No.1760/2010 : 15 : 1. Whether Section 19C of the Kerala General Sales Tax Act would take in within its fold transactions made by a Power of Attorney holder, prior to coming into the force of the provision? 2. Whether Sales Tax dues is a first charge on the land of the 7[th] respondent and whether State has a superior right over the property, in spite of attachment and sale of the property through Court proceedings? 3. Whether the 7[th] respondent’s property can be appropriated towards Sales Tax dues of the 6[th] respondent, without an independent tax assessment on the 7[th] respondent? 4. Whether take over of the land by the State without assessment of dues under Section 34 of the Revenue Recovery Act, is justified? 5. Whether this writ petition is maintainable in the facts of the case and if so, is it barred by _res judicata_ and whether there is delay or laches on the part of the petitioner? 23. As regards maintainability of the writ petition in the context of _res judicata_ , it may be noted that the petitioner had approached this Court earlier filing O.P. No.10661 of 2002. The said writ petition was filed by the petitioner seeking to direct the respondents to accept land tax from the petitioner, WP(C) No.1760/2010 : 16 : change Thandaper in favour of the petitioner and issue possession certificate to the petitioner. A learned Single Judge of this Court, as per Ext.P12 judgment, held that as the issue involves disputed questions of fact, the petitioner has to establish his rights in a properly constituted civil suit. The petitioner filed W.A. No.2728 of 2007 and a Division Bench of this Court modified the order passed by the learned Single Judge and permitted the petitioner to establish his rights in appropriate forum following appropriate proceedings. 24. The petitioner thereafter filed revision petition before the Land Revenue Commissioner invoking Section 83 of the Kerala Revenue Recovery Act, 1968. On dismissal of the said revision petition, the petitioner filed a further revision before the Secretary to Government, Department of Taxes. This Court, by Ext.P14 judgment in W.P.(C) No.2316 of 2009, directed the State to consider the said revision petition. The Government thereupon passed Ext.P21 order dated 10.09.2009. It is the said Ext.P21 order which is under challenge in this writ petition. As a Division Bench of this WP(C) No.1760/2010 : 17 : Court modified Ext.P12 judgment of the learned Single Judge and permitted the petitioner to avail remedies available to him, Ext.P12 judgment of the learned Single Judge cannot be treated as one deciding the issue involved finally, so as to constitute _res judicata_ . 25. As regards delay and laches, it may be noted that the auction certificate in respect of the property in question was issued to the 5[th] respondent-Bank through court proceedings on 31.01.1996. The petitioner purchased the said property as per Ext.P9 sale deed dated 18.09.2001. The petitioner thereafter approached the authorities to remit land tax and to effect transfer of registry. The petitioner approached this Court for that purpose filing O.P. No.10661/2002 which was dismissed as per Ext.P12, on 19.05.2005. The petitioner promptly challenged the said judgment of the learned Single Judge and obtained liberty to prosecute his statutory remedies, as per Ext.P13 judgment dated 21.11.2007 of a Division Bench of this Court. Ext.P21 order dated 10.09.2009 impugned in this writ petition was WP(C) No.1760/2010 : 18 : passed in continuation of the said Ext.P13 judgment. The writ petition was filed on 18.01.2010. In the circumstances, it cannot be said that the petitioner is guilty of delay or laches in filing this writ petition. 26. The next question to be answered is whether Section 19C of the Kerala General Sales Tax Act, 1963 would have retroactivity so as to take in transactions entered into by the 7[th] respondent as a Power of Attorney holder of the 6[th] respondent, much prior to the coming into force of Section 19C. If the answer is in the negative, the action of the Government in proceeding against the 7[th] respondent under the Revenue Recovery Act for sales tax dues, of auctioning his property and subsequent purchase of the said property as bought-in-land, will have to be held as invalid and the questions at Serial Nos.2 to 4 will loose significance. 27. The 6[th] respondent appointed the 7[th] respondent as Power of Attorney holder on 02.01.1986. The Power of Attorney was to carry out certain transactions under the dealer licence held by the 6[th] respondent. Ext.P2 press WP(C) No.1760/2010 : 19 : release issued by the Rubber Board would show that the Rubber Board suspended the licence issued to the 6[th] respondent soon thereafter with effect from 15.01.1987 until further notice. The 6[th] respondent was issued licence again only on 12.04.1989, as per Ext.P3. The 6[th] respondent cancelled the Power of Attorney given to the 7[th] respondent on 02.07.1989 as per Ext.P4. Respondents 1 to 4 would not admit the cancellation of the Power of Attorney by the 6[th] respondent as per Ext.P4. However, the 6[th] respondent, who issued the Power of Attorney, has sworn to an affidavit before this Court that he cancelled the Power of Attorney given to the 7[th] respondent on 02.07.1989. Ext.P6 would show that the 7[th] respondent was given a separate Dealer licence on 10.07.1989. In the circumstances, this Court finds no reason to disbelieve the statements made by respondents 6 and 7 that the 6[th] respondent had cancelled the Power of Attorney issued to the 7[th] respondent as per Ext.P4, on 02.07.1989. 28. The next question is, when the 7[th] respondent ceased to be a Power of Attorney holder of the 6[th] respondent WP(C) No.1760/2010 : 20 : with effect from 02.07.1989, whether Section 19C of the KGST Act which was brought into the statute book only with effect from 29.08.1989 can be invoked against the 7[th] respondent for recovery of sales tax dues of the 6[th] respondent. 29. Section 19C provides for Protective Assessment and enables Assessing Authorities to recover tax dues from agents, employees, managers, power of attorney holders, guarantees or persons who in any other capacity carrying on the business, in the name of a registered dealer. Section 19C of the KGST Act reads as follows:- ## “19C. Protective assessment:- Notwithstanding anything to the contrary contained in any judgment, decree, order, direction or decision of any Court, Tribunal or other Authority, where the assessing authority has reason to believe that any person is, or was carrying on business in the name of, or in association with any other person, either directly, or indirectly, whether as agent, employee, manager, power of attorney holder, guarantor or in any other capacity, such person and the person in whose name the registration certificate, if any, is taken, shall jointly and severally, be liable for the payment of the taxes penalty or other amount due under this Act WP(C) No.1760/2010 : 21 : which shall be assessed, levied and recovered from all or any of such person or persons as if such person or persons are dealers: Provided that before taking action under this Section, the persons concerned shall be given a reasonable opportunity of being heard.” Section 19C was inserted in the Kerala General Sales Tax Act, 1963 as per Act 3 of 1990 and has been given retrospective effect from 29.08.1989. The object of Section 19C is to prevent evasion of tax by dealers indulging in dealing in Benami names i.e., transacting in the names of their nominees, henchmen or others, from whom no amount could be recovered. Section 19C is intended to strike at such transactions by making the real dealer liable for the tax along with the ostensible dealer. 30. The constitutional validity of Section 19C was challenged before this Court in _**Keyemyes Trading Agency v. State of Kerala** [1994 (2) KLT 361]_ . This Court observed that the legislature has to match its wits with such measures to counter the devices adopted by unscrupulous dealers to WP(C) No.1760/2010 : 22 : avoid payment of the tax lawfully due to the state and Section 19C is intended to achieve this object. This Court rejected the plea that the Section is beyond the competence of the State legislature. 31. The question arising in this case is whether Section 19C can be retrospectively invoked to recover amounts from such persons who have been doing business during periods anterior to 29.08.1989 and who have ceased to do such business before the said date. 32. Retrospective effect of law means giving effect to or applying amendments in the existing law to transactions anterior to the date in which the amendment was brought in. The Hon'ble Apex Court in _**Hitendra Vishnu Thakur v. State of Maharashtra** [(1994) 4 SCC 602]_ explained the principles for amending an act retrospectively and held as follows:- “( _i_ ) A statute which affects substantive rights is presumed to be prospective in operation unless made retrospective, either expressly or by necessary intendment, whereas a statute which merely affects procedure, unless such a construction is textually impossible, is presumed to be retrospective in its application, should not be given an extended meaning and should be strictly confined to its clearly defined WP(C) No.1760/2010 : 23 : limits. ( _ii_ ) Law relating to forum and limitation is procedural in nature, whereas law relating to right of action and right of appeal even though remedial is substantive in nature. ( _iii_ ) Every litigant has a vested right in substantive law but no such right exists in procedural law. ( _iv_ ) A procedural statute should not generally speaking be applied retrospectively where the result would be to create new disabilities or obligations or to impose new duties in respect of transactions already accomplished. ( _v_ ) A statute which not only changes the procedure but also creates new rights and liabilities shall be construed to be prospective in operation, unless otherwise provided, either expressly or by necessary implication.” 33. Section 19C of the KGST Act may, at the first blush, appear to be procedural in nature inasmuch as it does not create any new tax liability but only provides for recovery of tax already fell due. But, as far as persons like Power of Attorney holders and others enunciated in Section 19C are concerned, it affects their substantive property rights, since they are made liable for tax dues of a registered dealer. It may be noted that running the business of a registered dealer as his Agent or as his Power of Attorney holder is not _per se_ WP(C) No.1760/2010 : 24 : an offence under any Indian law. It is for the first time that such persons have been made liable to be subjected to recovery proceedings for tax unpaid by the registered dealer. Section 19C indeed affects the substantive rights of persons like the petitioner. 34. Section 19C therefore creates new obligation on persons like the petitioner. As held by the Hon'ble Apex Court, even a procedural law should not be generally applied retrospectively where the result would be to create new disabilities or obligations or to impose new duties in respect of transactions already accomplished. 35. The Hon'ble Apex Court further held in _**Hitendra Vishnu Thakur**_ (supra) that a statute which not only changes the procedure but also creates new rights and liabilities shall be construed to be prospective in operation unless otherwise provided either expressly or by necessary implication. In the case of Section 19C, it may be noted that though the amendment was effected in the year 1990, it has been brought into force retrospectively only from 29.08.1989. WP(C) No.1760/2010 : 25 : 36. The judgment in _**Hitendra Vishnu Thakur**_ (supra) was in relation to issues arising from the Terrorist and Disruptive Activities (Prevention) Act, 1987. In the judgment in _**Assistant Commissioner of Urban Land Tax and others v. The Buckingham & Carnatic Co. Ltd.** [AIR 1970 SC 169]_ a Constitution Bench of the Apex Court, in the context of a taxation law, held that it is not right to say as a general proposition that the imposition of tax with retrospective effect per se renders the law unconstitutional. In applying the test of reasonableness to a taxing statute it is of course a relevant consideration that the tax is being enforced with retrospective effect but that is not conclusive in itself. Therefore, it is open for the petitioner to contend that retrospective operation of Section 19C creates a situation which can be described as an unreasonable restriction which violates the right of the petitioner to hold his property. In the writ petition, the petitioner has made a specific prayer to declare that no revenue recovery proceeding was liable to be initiated against the property purchased by the petitioner. WP(C) No.1760/2010 : 26 : 37. A statute affecting vested rights is _prima facie_ prospective unless the statute expressly or by necessary implication indicates a contrary intention. As per general rules, procedural amendments are applied retrospectively whereas substantive amendments are applied prospectively. The legislature has plenary power to and can make even substantive amendments retrospectively. If an enactment is expressed in a language which is fairly capable of either interpretation, it should be construed as prospective. 38. A reading of Section 19C would show that realisation of tax dues from persons like the petitioner contemplates assessment of tax dues. Therefore, it is clear that Section 19C is not procedural in nature, but on the other hand, creates a new liability on persons controlling business on behalf of registered dealers. 39. In the judgment in _**Mohammed Harid v. District Collector** [2014 (2) KLT 102]_ , the retroactive operation of Section 26C of the KGST Act came up for consideration before a Division Bench of this Court. By introduction of WP(C) No.1760/2010 : 27 : Section 26C with effect from 01.04.1999, the Directors of Private Companies were made jointly and severally liable for payment of sales tax, in cases where tax cannot be recovered from a Company. In the said judgment, this Court held that tax dues of a Private Company in respect of any assessment years prior to 01.04.1999 can be recovered from the Directors and if such recovery is made, it cannot be said that Section 26C is operated retrospectively. 40. The said judgment cannot have application on Section 19C for more than one reason. Firstly, who are brought under liability as per Section 26C, are Directors of a Private Company and it is for the liabilities of the Private Company. Even under the Companies Act, the Directors of a Private Company are liable and responsible for the running of the affairs of a Company. For that reason, Section 26C does not contemplate a separate assessment of Directors of a Private Company before effecting recovery of tax dues of the Company. In the case of Section 19C, the provision itself contemplates an independent tax assessment of Agents, WP(C) No.1760/2010 : 28 : Power of Attorney holders, etc. before effecting recovery. 41. When a statute newly subjects persons to recovery of tax, which tax till then was neither assessed on them nor was made recoverable from them, such subjugation cannot have retrospective operation. It cannot be used to dig out business transactions commenced and concluded long back prior to the creation of the tax liability on such persons. As the 7[th] respondent ceased to be a Power of Attorney holder of the 6[th] respondent prior to the coming into force of Section 19C, this Court is of the considered view that protective assessment proceedings under Section 19C could not have been legally invoked against the 7[th] respondent. 42. Therefore, revenue recovery proceedings initiated by respondents 1 to 4 against the 7[th] respondent for recovery of tax dues of the 6[th] respondent is illegal. All proceedings against the 7[th] respondent including the attachment of his property for recovery of such dues, are therefore illegal. Exts.P15 and P21 are hence set aside. Consequently, it is declared that the petitioner would be entitled to pay land tax WP(C) No.1760/2010 : 29 : and to apply for transfer of registry, if he is otherwise eligible. Writ petition is allowed as above. Sd/- **N. NAGARESH, JUDGE** aks/23.02.2021 WP(C) No.1760/2010 : 30 : ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** ## **EXHIBIT P1** **TRUE COPY OF THE LICENCE NO.1606/8586, CORRESPONDING TO REGISTRATION NO.D-7716 DATED 20.02.1985 ISSUED TO 6TH RESPONDENT BY THE RUBBER BROAD.** **EXHIBIT P2** - **TRUE COPY OF THE PROCEEDING BEARING REFERENCE NO.D-7716/MIS/87 DATED 09.01.2987 OF THE RUBBER BOARD.** **EXHIBIT P3** **TRUE COPY OF THE PROCEEDING BEARING REFERENCE NO.22/D-7716/89 DATED 12.04.1989 OF THE RUBBER BOARD.** - **EXHIBIT P4** - **TRUE COPY OF THE REVOCATION OF POWER OF ATTORNEY DEED DATED 02.07.1989.** - **EXHIBIT P5** - **TRUE COPY OF THE RECEIPT DATED 15.07.1989 ISSUED TO THE 7TH RESPONDENT BY THE 6TH RESPONDENT.** - **EXHIBIT P6 TRUE COPY OF THE PROCEEDING BEARING REFERENCE NO.22-D-12876/89/MSW DATED 16.08.1989 OF THE RUBBER BOARD.** - **EXHIBIT P7** - **TRUE COPY OF THE DECREE DATED 30.09.87 IN OS NO.403/86 OF THE SUBORDINATE JUDGE'S COURT, KOTTAYAM.** - **EXHIBIT P8 TRUE COPY OF THE AUCTION CERTIFICATE DATED 31.01.96 OBTAINED BY THE 5TH RESPONDENT.** - **EXHIBIT P8 A** - **TRUE COPY OF THE ORDER DATED 27.11.1996 IN EP NO.71/96 OF THE LEARNED PRINCIPAL SUB COURT, KOTTAYAM.** - **EXHIBIT P8 B TRUE COPY OF THE PROCEEDING BEARING NO.PV:19/98A (NIL CASE) DATED 02.02.1998 OF THE 5TH RESPONDENT.** - **EXHIBIT P8 C TRUE COPY OF THE RECEIPT NO.46 OF BOOK** WP(C) No.1760/2010 : 31 : - **NO.892 DATED 07.02.98 ISSUED TO THE 5TH RESPONDENT BY THE 4TH RESPONDENT.** - **EXHIBIT P8 D TRUE COPY OF ENCUMBRANCE CERTIFICATE DATED 20.02.2001 BEARING NO.562/01 ISSUED BY THE SUB REGISTRAR OFFICE, ERATTUPETTA.** - **EXHIBIT P9 TRUE COPY OF THE DEED NO.1837/01 DATED 18.09.2001 OF THE SUB REGISTRY, ERATTUPETTA.** - **EXHIBIT P10 TRUE COPY OF THE REPRESENTATION DATED 03.04.2002 FILED BY THE PETITIONER BEFORE THE 4TH RESPONDENT.** - **EXHIBIT P11 TRUE COPY OF THE REPRESENTATION DATED 08.04.2002, FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT.** - **EXHIBIT P12 TRUE COPY OF JUDGMENT DATED 19.05.2005 IN OP NO.10661 OF 2002 OF THIS HONOURABLE COURT.** - **EXHIBIT P13 TRUE COPY OF JUDGMENT DATED 21.11.2007 IN WA NO.2728 OF 2007 OF THIS HON'BLE COURT.** - **EXHIBIT P14 TRUE COPY OF REVISION PETITION DATED 25.12.2007 FILED BY PETITIONER BEFORE THE 8TH RESPONDENT.** - **EXHIBIT P14 A TRUE COPY OF JUDGMENT DATED 22.02.2008 IN WPC NO.5089/2008 OF THIS HON'BLE COURT.** - **EXHIBIT P15 TRUE COPY OF ORDER BEARING NO.LR.B77120/2008 DATED 04.06.2008 ISSUED BY THE 8TH RESPONDENT.** - **EXHIBIT P16 TRUE COPY OF REPRESENTATION DATED 01.07.2008 FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT.** - **EXHIBIT P17 TRUE COPY OF THE JUDGMENT DATED 22.01.2009 IN WPC NO.2316/2009 OF THIS** WP(C) No.1760/2010 : 32 : ## **HON'BLE COURT.** **EXHIBIT P18 TRUE COPY OF THE NOTICE NO.24575/H3/09/RD DATED 20.06.2009 ISSUED BY THE 1ST RESPONDENT.** **EXHIBIT P19 TRUE COPY OF THE PETITION DATED 29.06.2009 FILED BY THE 6TH RESPONDENT BEFORE THE 1ST RESPONDENT.** **EXHIBIT P20 TRUE COPY OF THE REPRESENTATION DATED 29.06.2009 FILED BY THE 7TH RESPONDENT BEFORE THE 1ST RESPONDENT.** **EXHIBIT P21 TRUE COPY OF GO(MS) NO.358/09/RD DATED 10.09.2009 ISSUED BY THE GOVERNMENT.** - **RESPONDENTS' EXHIBITS:** **EXHIBIT R2(a)** - **A TRUE PHOTOCOPY OF THE ACCOUNT OF NEW INDIA RUBBERS OBTAINED FROM THE STATE BANK OF TRAVANCORE, KOTTAYAM MAIN BRACNH** - **EXHIBIT R2(b) A TRUE PHOTOCOPY OF THE LETTER DATED 24.05.1990 ISSUED FROM THE STATE BANK OF TRAVANCORE, KOTTAYAM MAIN BRANCH** - **EXHIBIT R2(c)** **A TRUE PHOTOCOPY OF THE NOTICE ISSUED UNDER SEC.17(3) R/W SEC.19C OF THE KGST ACT, 1963 DATED 06.09.1990** - **EXHIBIT R2(d) A TRUE PHOTOCOPY OF THE ASSESSMENT ORDER DATED 30.10.1990** - **EXHIBIT R3 A A TRUE COPY OF THE MAHAZAR DATED 25.02.1992.** - **EXHIBIT R3 B TRUE COPY OF THE PROCEEDINGS OF THE DISTRICT COLLECTOR.** **EXHIBIT R3 C TRUE COPY OF THE JUDGMENT IN OP NO.32424/2001.** **EXHIBIT R3 D TRUE COPY OF THE STOP MEMO.** WP(C) No.1760/2010 : 33 : |**EXHIBIT R3**|**E**|**TRUE COPY OF THE AGREEMENT.**| |---|---|---| |**EXHIBIT R7**|**A**|**TRUE COPY OF THE FORM F DECLARATION**| |||**BEARING SERIAL NO.P670002 DATED**| |||**29/10/1988 ISSUED BY THE 6TH**| |||**RESPONDENT.**| SR