Rajeesh Kumar P.N. v. District Collector, Kannur and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MRS. JUSTICE SHOBA ANNAMMA EAPEN THURSDAY, THE 10[TH] DAY OF AUGUST 2023 / 19TH SRAVANA, 1945** **WP(C) NO. 7213 OF 2014** ## **PETITIONER/S:** RAJEESH KUMAR.P.N., AGED 32 YEARS S/O. NARAYANAN, PUTHUKATTIL HOUSE, 7/560, PONNAMVAYAL, PADIYOTTICHAL, KANNUR DISTRICT. BY ADVS. SRI.PRAVEEN K. JOY SRI.T.A.JOY SRI.NIXON PAUL ## **RESPONDENT/S:** 1 DISTRICT COLLECTOR, KANNUR-670 001. 2 REVENUE RECOVERY TAHSILDAR, THE TAHSILDAR OFFICE, TALUK OFFICE, TALIPARAMBA-670 141. 3 THE VILLAGE OFFICER, VAYAKARA VILLAGE, PAYYANNUR, KANNUR DISTRICT-670 001. 4 THE COMMERCIAL TAX OFFICER, WORKS CONTRACT, COMMERCIAL TAXES, ERNAKULAM-682 018. 5 MS. SLR TELECOM NET WORKS LTD. A PUBLIC LIMITED COMPANY, HAVING REGISTERED OFFICE AT 36/248-B, 1ST FLOOR, LISSIE HOSPITAL ROAD, KOCHI682 018, REPRESENTED BY DIRECTOR, RAJESH KUMAR. ## **OTHER PRESENT:** SRI. V.K. SHAMSUDHEEN -SR. GP THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 10.08.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 7213 OF 2014 ..2.. ## **JUDGMENT** The writ petition is filed seeking for a direction to quash Exts.P3 to P6 notices issued by the second respondent – Tahsildar (RR), Kottayam. 2. The petitioner is one of the Directors of the fifth respondent, a Public Limited Company, viz., M/s. S.L.R. Telecom Net Works Limited (for short, “the Company”). The 4[th] respondent has issued assessment order _ex parte_ under Section 22(3) of the Kerala Value Added Tax Act, 2003 (for short, “the KVAT Act”). According to the petitioner, in the said circumstance, proceedings are to be initiated against the 5[th] respondent Company, however, the second respondent issued Exts.P3 to P6 demand notices under the Revenue Recovery Act to the petitioner in his personal address as if it is to the Company. Subsequently, the petitioner submitted Ext.P7 petition stating objections under Section 72 of the Revenue WP(C) NO. 7213 OF 2014 **==> picture [31 x 8] intentionally omitted <==** Recovery Act before the first respondent for enquiry into the matter and also to withdraw the notices of revenue recovery as against the petitioner. According to the petitioner, the Company being a Public Limited Company, no proceedings could be validly initiated against the property of the petitioner for realization of the arrears of the Company. Aggrieved by the proceedings against the petitioner under the provisions of the Kerala Revenue Recovery Act as per Exts.P3 to P6, the petitioner has approached this Court with the above writ petition. 3. Heard the learned counsel for the petitioner and the learned Senior Government Pleader. 4. The learned counsel for the petitioner submits that the petitioner, being one of the Directors of the Public Limited Company, cannot be proceeded against under Section 65 of the Revenue Recovery Act for realizing the arrears of WP(C) NO. 7213 OF 2014 **==> picture [31 x 8] intentionally omitted <==** the Company. It is submitted that Section 39 of the KVAT Act is applicable only in the case of a Director of a Private Limited Company and is not attracted when the Company is a Public Limited Company and hence, the revenue officials have no authority to issue Exts.P3 to P6 revenue recovery notices. To substantiate the said contention, the learned counsel relied on a decision of this Court in **Pocker Ullattil Jasmin Villa v. State of** **Kerala** [2015 SCC OnLine Ker 27207]. 5. The learned Government Pleader, on instructions, submits that the liability of the Company is not disputed and the petitioner, being the Director of the Company at the relevant time, is liable for the dues of the Company. 6. Section 39 of the KVAT Act reads as follows: ## **“39. Liability of Directors of a Private** **Company:-** Where any tax or other amount recoverable under this Act from any private company, whether existing or wound up or under liquidation, cannot be recovered for any WP(C) NO. 7213 OF 2014 **==> picture [31 x 8] intentionally omitted <==** reason whatsoever, every person who was a director of such company at any time during the period for which the tax or other amount is due under this Act shall be jointly and severally liable for the payment of such tax or other amount unless he proves that the nonrecovery cannot be attributed to any negligence, misfeasance or breach of duty on his part in relation to the affairs of the company.” On going through the above provision, it is clear that the said provision is applicable only in the case of a Director of a Private Limited Company and not applicable to the Director of a Public Limited Company. The contention of the petitioner that he is one of the Directors of the Company is not disputed by the respondents. **==> picture [381 x 12] intentionally omitted <==** prescribed under Sub-Section (4) of Section 31 of the KVAT Act, which reads as follows: ## “ **31. Payment and recovery of tax** : - xxxxx (4) Any tax or any other amount due under this Act from a dealer or any other person may, without prejudice to any other mode of recovery, be recovered, (a) as if it were an arrear of land revenue: (b) on application to any Magistrate, by such Magistrate as if it were a fine imposed by him: Provided that no proceedings for such recovery shall be taken or continued as long as WP(C) NO. 7213 OF 2014 **==> picture [31 x 8] intentionally omitted <==** such dealer or other person has, in regard to the payment of such tax or other amount, as the case may be complied with an order by any of the authorities to whom he has appealed or applied for revision, under the provisions of this Act.” 8. As per the afore provision, the revenue authorities can initiate proceedings under the Revenue Recovery Act for recovery of the amount due under the KVAT Act from a dealer or any other person as if it were an arrear of the land revenue. In order to proceed under Section 31 of the KVAT Act, there must be an amount due under the KVAT Act from a dealer. Here, the amount due is from a Public Limited Company and admittedly, the petitioner is one of the Directors of the said Company. In **Punalur Paper Mills Ltd. &** **Another v. District Collector & Others** [1985 60 STC 193 Ker] _,_ this Court held that, to be a defaulter under the Sales Tax Act, a dealer, who has been assessed to tax, should have failed to pay the said tax within the time stipulated in the notice of demand. In other words, until an WP(C) NO. 7213 OF 2014 **==> picture [31 x 8] intentionally omitted <==** assessee (dealer) is declared a defaulter, recovery proceedings cannot be initiated against the said person. Since no liability has been finalized against the petitioner, who is one of the Directors of a Public Limited Company, the revenue authorities cannot proceed against the petitioner for realizing the arrears of the Company in question. In the absence of expressed provisions, which entitle the respondents to recover the amounts due from the Directors of a Public Limited Company, the liability of the Company cannot be fastened on the Directors. 9. Hence, on a consideration of the entire facts and circumstances of the case, I am of the opinion that the petitioner being one of the Directors of a Public Limited Company, the respondents cannot proceed against, for the dues recoverable from the Company and hence, Exts.P3 to P6 revenue recovery notices deserve to be set aside. WP(C) NO. 7213 OF 2014 **==> picture [31 x 8] intentionally omitted <==** Accordingly, the writ petition is disposed of, as follows; a)Exts.P3 to P6 revenue recovery notices are set aside. b)The petitioner cannot be proceeded against for recovery of the dues of the Company in question. c)Respondents are free to proceed against the Company for recovery of the dues of the Company from its assets as permissible under the relevant provisions of law. d)If the petitioner has executed any personal surety bond in favour of the respondents, they are free to proceed against, to the extent of the amount shown in the bond. ## **Sd/-** ## **SHOBA ANNAMMA EAPEN** ## **JUDGE** bka/- WP(C) NO. 7213 OF 2014 ..9.. ## **APPENDIX OF WP(C) 7213/2014** PETITIONER EXHIBITS P1 : COPY OF THE RELEVANT PAGE OF THE DETEAILS OF M/S. SLR TELECOM NET WORKS LIMITED OF THE SITE OF MINISTRY OF CORPORATE AFFAIRS. P2 : COPY OF THE PROCEEDINGS OF 4TH RSPONDENT AND NOTICE OF DEMAND DTD.1.3.2013 WHICH WAS ISSUED TO THE PETITIONER ON 11.3.2014. P3 : COPY OF THE DEMAND NOTICE DTD.27.1.2014 OF THE 2ND RESPONDENT UNDER R.R.ACT. P4 : COPY OF THE DEMAND NOTICE DTD.27.1.2014 OF THE 2ND RESPONDENT. P5 : COPY OF THE DEMAND NOTICE DTD.27.1.2014 OF THE 2ND RESPONDENT. P6 : COPY OF THE DEMAND NOTICE DTD.27.1.2014 OF THE 2ND RESPONDENT. P7 : COPY OF THE PETITION SUBMITTED BEFORE THE 1ST RESPONDENT.