Muneeru Rahaman v. State Of Kerala - Kerala High Court, 5 Aug 2024

Judgment

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.

MONDAY, THE 5TH DAY OF AUGUST 2024 / 14TH SRAVANA, 1946 WA NO. 703 OF 2024 JUDGMENT DATED 14.02.2024 ARISING FROM: WP(C) NO.20716 OF 2022 APPELLANT/PETITIONER IN WP(C):

MUNEERU RAHAMAN, AGED 42 YEARS SON OF MR.THAYIL MUHAMMED HAJI, NO.6, PUZHAYORAM VILLAS, ANAKKAYAM (PO), MANJERI, MALAPPURAM DISTRICT, PIN - 676509 BY ADVS.

SRI.SHAJI CHIRAYATH SMT.G.SAVITHA SMT.JIJI M. VARKEY SMT.M.K.SAFEELA BEEVI SRI.M.M.SHAJAHAN RESPONDENTS/RESPONDENTS IN WP(C):

1 STATE OF KERALA, REPRESENTED BY THE PRINCIPAL SECRETARY, DEPARTMENT OF TAXES, SECRETARIAT, THIRUVANANTHAPURAM, PIN - 695001 2 COMMERCIAL TAX OFFICER, CIRCLE NO.IV, OFFICE OF THE STATE GOODS & SERVICES TAX DEPARTMENT, OLD RAILWAY STATION ROAD, KARGIL LANE, KACHERIPADY, ERNAKULAM, PIN - 682 018.

3 DEPUTY TAHSILDAR (REVENUE RECOVERY), TALUK OFFICE ROAD, VAYAPPARAPADI, VELLARANGAL, MANJERI (PO), MALAPPURAM DISTRICT, PIN - 676517 BY SENIOR GOVERNMENT PLEADER SRI.V K SHAMSUDHEEN THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 05.08.2024, ALONG WITH WA.482/2024 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WA No.703 of 2024 WA No.482 of 2024 WA No.706 of 2024 & WA No.711 of 2024 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.

MONDAY, THE 5TH DAY OF AUGUST 2024 / 14TH SRAVANA, 1946 WA NO. 482 OF 2024 JUDGMENT DATED 14.02.2024 ARISING FROM: WP(C) NO.20363 OF 2022 APPELLANTS/PETITIONERS:

1 MUHAMMED, AGED 62 YEARS VEETILAYIL HOUSE, PUNNAYOORKULAM DESOM, PUNNAYOORKULAM VILLAGE, CHAVAKKAD TALUK, THRISSUR DISTRICT, PIN - 679561 2 VALSAN PANICKER, AGED 57 YEARS S/O. JANARDHANA PANICKER, MALANA HOUSE, AYIROOR DESOM, PONNANI TALUK, MALAPPURAM DISTRICT - 679 580, PRESENTLY RESIDING AT ASHRAMAM NAGAR, CHAMUNDESWARY ROAD, GURUVAYOOR VILLAGE, CHAVAKKAD TALUK, THRISSUR DISTRICT, PIN - 680101 BY ADV P.K.SAJEEV RESPONDENTS/RESPONDENTS:

1 DEPUTY TAHSILDAR (RR), HEAD QUARTERS, TALUK OFFICE, CHAVAKKAD, PIN - 680506 2 COMMERCIAL TAX OFFICER (LUXURY TAX), STATE GOODS AND SERVICES TAX DEPARTMENT, KERALA, COMMERCIAL TAX COMPLEX, AYYANTHOLE, THRISSUR-3 , REPRESENTED BY DEPUTY COMMISSIONER., PIN - 680003 BY SENIOR GOVERNMENT PLEADER SRI.V K SHAMSUDHEEN THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 05.08.2024, ALONG WITH WA.703/2024 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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MONDAY, THE 5TH DAY OF AUGUST 2024 / 14TH SRAVANA, 1946 WA NO. 706 OF 2024 JUDGMENT DATED 14.02.2024 ARISING FROM WP(C) NO.20728 OF 2022 APPELLANT/PETITIONER IN WP(C):

MUNEERU RAHAMAN, AGED 41 YEARS SON OF MR. THAYIL MUHAMMED HAJI, NO.6, PUZHAYORAM VILLAS, ANAKKAYAM (PO), MANJERI, MALAPPURAM DISTRICT, PIN-676 509, BY ADVS.

SRI.SHAJI CHIRAYATH SMT.M.K.SAFEELA BEEVI SRI.M.M.SHAJAHAN SMT.SAVITHA GANAPATHIYATAN RESPONDENTS/RESPONDENTS IN WP(C):

1 STATE OF KERALA REPRESENTED BY THE PRINCIPAL SECRETARY, DEPARTMENT OF TAXES, SECRETARIAT, THIRUVANANTHAPURAM PIN - 695 001.

2 COMMERCIAL TAX OFFICER, CIRCLE NO. IV, OFFICE THE STATE GOODS & SERVICES TAX DEPARTMENT, OLD RAILWAY STATION ROAD, KARGIL LANE, KACHERIPADY, ERNAKULAM, PIN - 682018.

3 DEPUTY TAHSILDAR (REVENUE RECOVERY), TALUK OFFICE ROAD, VAYAPPARAPADI, VELLARANGAL, MANJERI (PO), MALAPURAM DISTRICT ,PIN- 676517 BY SENIOR GOVERNMENT PLEADER SRI.V K SHAMSUDHEEN THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 05.08.2024, ALONG WITH WA.703/2024 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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MONDAY, THE 5TH DAY OF AUGUST 2024 / 14TH SRAVANA, 1946 WA NO. 711 OF 2024 JUDGMENT DATED 14.02.2024 ARISING FROM : WP(C) NO.20723 OF 2022 APPELLANT/PETITIONER IN WP(C):

MUNEERU RAHAMAN, AGED 42 YEARS SON OF MR.THAYIL MUHAMMED HAJI, NO.6, PUZHAYORAM VILLAS, ANAKKAYAM (PO),MANJERI, MALAPPURAM DISTRICT, PIN-676509.

BY ADVS.

SRI.SHAJI CHIRAYATH SMT.JIJI M. VARKEY SMT.M.K.SAFEELA BEEVI SRI.M.M.SHAJAHAN SMT.SAVITHA GANAPATHIYATAN RESPONDENTS/RESPONDENTS IN WP(C):

1 STATE OF KERALA, REPRESENTED BY THE PRINCIPAL SECRETARY, DEPARTMENT OF TAXES, SECRETARIAT, THIRUVANANTHAPURAM ,PIN - 695001.

2 COMMERCIAL TAX OFFICER, CIRCLE NO. IV, OFFICE THE STATE GOODS & SERVICES TAX DEPARTMENT, OLD RAILWAY STATION ROAD, KARGIL LANE, KACHERIPADY, ERNAKULAM PIN - 682018.

3 DEPUTY TAHSIDAR (REVENUE RECOVERY), TALUK OFFICE ROAD, VAYAPPARAPADI, VELLARANGAL, MANJERI (PO), MALAPURAM DISTRICT PIN- 676517.

BY SENIOR GOVERNMENT PLEADER SRI.V K SHAMSUDHEEN THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 05.08.2024, ALONG WITH WA.703/2024 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WA No.703 of 2024 WA No.482 of 2024 WA No.706 of 2024 & WA No.711 of 2024 JUDGMENT Dr. A.K.Jayasankaran Nambiar, J.

In all these Writ Appeals, the short point that arises for consideration is regarding the legality of the impugned judgment of the learned Single Judge that considered the issue of whether the revenue recovery proceedings initiated against Directors of Private Limited Companies, for the realisation of amounts due from the said companies, was justified or not. The learned Single Judge found that inasmuch as the liability of Directors, was joint and several with the Company in terms of Section 39 of the Kerala Value Added Tax Act, the appellants/writ petitioners could not shirk away from their liabilities in relation to the dues owed to the State by the companies.

2. When these appeals came up for admission before us, the learned counsel for the appellants relied on the judgments of this Court in Jose Kurian and Others v. Deputy Tahsildar (RR) Ekm. And Others [2011 (4) KHC 879], Mohammed Harid T.S. v. District Collector, Wayanad and Others [2014 (2) KHC 257], and the unreported judgment of this Court dated 20.12.2018 in WP(C).

No.32608 of 2004 to contend that it was well settled that, although the liability of the Directors of a company was joint and several along with the defaulting company, the State was bound to demonstrate that recovery steps against the company could not be pursued and only in

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WA No.703 of 2024 WA No.482 of 2024 WA No.706 of 2024 & WA No.711 of 2024 that event would they be justified in initiating recovery proceedings against the Directors of the company.

3. We have heard the learned counsel for the appellants in all these Writ Appeals and also the learned Senior Government Pleader for the respondents.

4. On a consideration of the rival submissions, we find force in the submissions of the learned counsel for the appellants, relying on the decisions aforementioned. Admittedly in the instant cases, there is nothing on record that would show that the respondents had taken steps to realise the defaulted amounts from the companies in question or that they have recorded their satisfaction as regards the non- availability of assets of the company which can be proceeded against for the realisation of the dues outstanding from the said company.

Under such circumstances, we are of the view that this exercise of recording a satisfaction regarding the non-availability of any assets of the companies concerned that can be proceeded against, must first be undertaken and only thereafter can the revenue recovery proceedings against the Directors be continued.

5. We, therefore, dispose these Writ Appeals, without setting aside the revenue recovery notices impugned in the Writ Petitions, but making it clear that recovery steps pursuant to the said notices against

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WA No.703 of 2024 WA No.482 of 2024 WA No.706 of 2024 & WA No.711 of 2024 the writ petitioner Directors shall not be pursued unless and until the Principal Secretary, Department of Taxes of the Government of Kerala, first ascertains as to whether or not there are properties standing in the name of the companies concerned, which can be proceeded against for realisation of the dues outstanding from the said company. The Principal Secretary, Department of Taxes of the Government of Kerala shall pass a reasoned order in this matter clearly mentioning whether or not there are assets in the name of the companies in question that can be proceeded against for the recovery of the dues outstanding from the said companies or whether circumstances are such that there are no assets in the name of the defaulting companies, and therefore, the personal assets of the Directors have to be proceeded against. Such an order shall be passed by the Principal Secretary of Taxes, after hearing the appellants herein, within an outer time limit of three months from the date of receipt of a copy of this judgment, and the order communicated to them, before proceeding further with the revenue recovery steps, if necessitated.

The Writ Appeals are disposed as above.

Sd/- DR. A.K.JAYASANKARAN NAMBIAR JUDGE Sd/- SYAM KUMAR V.M.

JUDGE mns