JUDGMENT
A.M. Sapre, J.
1. Having heard the learned counsel for the parties and having perused the record of the case, I am of the considered view that this matter needs to be remanded to Commercial Tax Officer–the respondent No. 3 hence for holding a proper inquiry into the issue which was before him and is now subject-matter of this writ.
2. The issue arises out of the proceedings under Section 38 of the Madhya Pradesh Vanijyik Kar Adhiniyam, 1994 read with Rule 44 of the Rules framed thereunder.
3. It appears that the Sales Tax (Commercial Tax Department) has to recover a sum of Rs. 1,65,00,000 by way of outstanding towards commercial tax due from the respondent No. 4 company. In other words, there are commercial tax dues amounting to Rs. 1,65,00,000 standing against the respondent No. 4 and the same are not being paid by the respondent No. 4. They have in other words become chronic defaulter to State. It is for this reason, the sales tax/commercial tax authorities have been running from pillar to post and in my opinion rightly to recover this outstanding dues by resorting to several modes available to them under the Act. One such mode is prescribed under Section 38 of the Act. This section empowers the tax sleuths to recover the outstanding directly from a person who has to pay or liable to pay certain money to the defaulting dealer against or/and in relation to any transaction of sale or purchaser as the case may be. In other words, if the department authorities come to know that, let us say, A has to pay a particular amount to defaulting dealer, then in that event the department has full right to attach and then recover the amount directly from the hands of A and adjust the same against the outstanding of a defaulting dealer. The only requirement is that it is first required to be proved to the satisfaction of an authority that such amount is really payable by A to the defaulting dealer. It is this section which is put in operation by the sales tax sleuths against the petitioner and respondent No. 4 for realisation of Rs. 1,65,00,000 which as stated supra is under challenge by the petitioner.
4. In substance, the sales tax sleuths have attached certain electronic goods such as TV, VCD player, etc., while they were in possession/custody of the petitioner by taking resort to Section 38 ibid. According to departmental authorities these goods really belong to respondent No. 4 though is shown to be in possession of petitioner whereas in principle the case of the petitioner is that firstly they have not to paid any money to respondent No. 4, and secondly, and on the other hand they have to recover amount of Rs. 3 crore from the respondent No. 4, and lastly the goods which are under attachment are purchased by the petitioner from the respondent No. 4 and money advanced by the petitioner stands adjusted against the price of these attached goods and hence the sales tax department does not have any right to attach these goods treating them to belong to respondent No. 4. It is essentially this dispute which was going on before the authorities.
5. In this petition, the petitioner as also the respondent No. 4 have filed several documents to justify their stand. The sales tax department has also averred on affidavits that it is only to defraud the Revenue, the petitioner and respondent No. 4 are taking this stand so that the amount may not be recovered out of sale of the goods.
6. As taken note of supra looking to the documents filed and the stand of the parties, it is rather imperative for the respondent No. 3 to hold an enquiry on following issues and then record his satisfaction. Indeed, any finding one way or other on following issues which I propose to frame would decide the fate of the proceedings initiated by the department under Section 38 ibid. Since no such categorical finding has been recorded by the department and no proper inquiry was conducted, as contemplated under Section 38 ibid, hence it is considered necessary to remit the case to the authority concerned.
7. In my opinion following issues need to be answered by the respondent No. 3 on facts and then record his satisfaction.
(1) Whether petitioner holds any money for or on account of respondent No. 4 and if so how much,
or
(2) In other words, whether petitioner is liable to pay any money to respondent No. 4 against or in relation to any transaction and if so how much ? (3) Whether goods attached belong to respondent No. 4 or whether they have been purchased by the petitioner ?
(4) If the attached goods are purchased by the petitioner then whether any payment has been made against these purchasers and if so when and in what manner ?
(5) Whether petitioner has made any advances to respondent No. 4 and if so how much and against which transaction or/and arrangement and whether such arrangement is real and genuine ?
8. It is on these issues, the parties, i.e., petitioner will lead evidence so too the respondent No. 4 to satisfy the authority that what is the actual bargain inter se parties. If necessary, parties may file any more documents as also lead oral evidence. The respondent No. 3 will then pass a reasoned order on the basis of material brought on record and record his satisfaction. Let this enquiry be completed within one month. Parties to remain present before respondent No. 3 on October 31, 2002. In the meantime the attachment of the goods, then of the goods will continue. However, in case, either of the parties wish to release the attachment, the same can be done by furnishing bank guarantee in favour of respondent No. 3 to the extent of the value of the attached goods.
With these directions, the petition is disposed of.