P L D 1961 (W (PLP)

S. A. MAHMOOD, J.--‑This writ petition is by Malik Muhammad Nawaz Khan and six others. It arises out of the following facts. The Kahror Pacca Co‑operative Commission Shop Limited, respondent No. 6, is a Co‑operative Society registered on the 15th of March 1948 under the Co‑operative Societies Act, 1912. Under Article 15 of its Articles of Association (Anex. P. 1) the liability of its member is limited to double the nominal value of. their shares. The value of the shares of the petitioners as mentioned in Annexure `P. 2' is as follows :‑ Rs. Malik Muhammad Nawaz Khan, Petitioner. No. 1 ... 2,000 Khan Sadiq Muhammad Khan, Petitioner No. 2 ... 800 Malik. Shah .Nawaz Khan, Petitioner No'. 3... 2,000 Mirza Muhammad Anwar Beg, Petitioner No. 4 ... 1,000 Qasim Ali, Petitioner No. 5... 500 Habib, Petitioner No. 6... 2,500 Khan Allah Rakha Khan, Petitioner No. 7... 1,000 2. The Co‑operative Commission Shop Ltd. was assesred to income‑tax and sales tax for the years 1948‑49 and 1949‑50 and a certificate for realization of Rs. 17,288‑9‑0 from the Society was sent to the Collector of Multan, who passed it on to the Naib Tahsildar, Lodhran, exercising powers of an Assistant Collector for realisation of the amount as arrears of land revenue. He issued warrants of attachment (Anx. P. 3) against the Society. This was marked to the Girdawar who reported that there was no shop bearing the name and that the names of the members of the Society might be intimated for realisation of the amount from them. The petitioners claim, and this is not denied by the respon dents, that the entire amount is being realised as arrears of land revenue severally and individually from the petitioners as members of the Co‑operative Commission Shop Ltd. 3. Besides, the District Food Controller, wrote to the Deputy Commissioner, Multan, to arrange for recovery of Government dues to the tune of Rs. 18,550‑5‑0 from the Society on account of sugar gunny bags and other stocks supplied by the Government to the Kehror Pacca Commission Shop Ltd. Along with this letter was attached (Anx. P. 4) containing the names of the members of the Society. These papers were also forwarded to the Naib Tahsildar, Lodhran, who took steps to realise the amount as a whole from the petitioners and the other members of the Society severally and individually. The petitioners challenge their liability to pay the amount individually in excess ' of double the nominal value of their shares. 4. Learned counsel for the petitioners relies on section 44 of the Co‑operative Societies Act (Act lI of 1912) which enacts as follows :‑ "(1) All sums due from a registered society or from an officer or member or past member of a registered society as such to the Government, including any costs awarded to the Govern ment under section 37, may be recovered in the same manner as arrears of land revenue. "(2) Sums due from a registered society to Government and recoverable under subsection (1) may be recovered, firstly, from the property of the society, secondly, in the case of a society of which the liability of the members is limited, from the members subject to the limit of their liability ; and, thirdly in the case of other societies, from the members." Learned counsel for the petitioners does not deny that as the two sums of Rs. 18,550‑5‑0 and Rs. 17,288‑9‑0 are due to the Govern ment from the Society, they are recoverable as arrears of land revenue under subsection (1) of section 44 of the Co‑operative Societies Act. The latter amount is also recoverable as arrears of land revenue as a certificate under section 46 (2), Income‑tax Act was issued by the Income‑tax Officer. There is no objection to the amounts being realised as arrears of land revenue, but as under subsection (2) of section 44 of the Co‑operative Societies Act the amounts due to the Government from the Society shall first be recovered from the property of the Society and, secondly, from the members of the Society, subject to the limit of their liability, it is contended that the individual liability of the petitioners does not exceed twice the value of their shares, as the Kehror Pacca Co‑ope rative Commission Shop‑Limited is a registered Society and the liability of its members is limited under Article 1 5 of its Articles of Association to twice the nominal value of their shares. Thus, it is argued that realization of the amount in excess of double the value of the shares from each of the petitioners is illegal and incompetent. 5. With regard to the sum of Rs. 18,550‑5‑0 due to the Government from the Society, on account of gunny bags and other stocks supplied to the Society, subsection (2) of section 44 of the Co‑operative Societies Act is go clear that Maulvi Mushtaq Hussain, learned Additional Advocate‑General, who appeared for respondent No. 1, had to concede that the dues could not be realis ed from each of the petitioners in excess of twice the value of his share. The contention of the learned counsel for the petitioners with regard to these Government dues must therefore, prevail. 6. Mr. Abdul Haq, learned counsel for respondent No. 3 does not concede the force of the contention of the learned counsel for the petitioners. He argues that the liability of the members of the Society is governed by the 'provisions of the Income‑tax Act and that as section 44 of the Income‑tax Act creates individual liability of members of an association where the association of persons has been discontinued, or dissolved, the liability of the members of an existing association of persons should also be inferred, as assessment of the association of persons' means assessment of each individual members of the association. The argument is that the society is an association of person and when it was assessed to income-tax and sales‑tax, its each indivi dual member was in fact assessed and is as such liable to pay the arrears of income‑tax and sales‑tax individually and collectively. In reply learned counsel for the petitioners argues that section 44 of the Income‑tax Act has no application to the case, as the society has not been dissolved or discontinued. He also argues that subsection (2) of section 44 of the Co‑operative Societies Act governs and thereby limits the liability of members of a Co‑operative Society, and must prevail there being no special contrary or inconsistent provision in the Income‑tax Act, which expressly overrides it. 7. Section 44 of the Income‑tax Act, provides as under: "Where any business, profession or vocation carried on by a firm or association of persons has been discontinued, or where a firm or an association of persons is dissolved all the provisions of this Act shall, so ,far as may be, apply' as if no such discontinuance or dissolution had taken place and every person who was at the time of such discontinuance or dissolution a partner of such firm or a member of such associa tion shall be jointly and severally liable for the amount of tax payable by the firm ,or association of persons or the partners of the firm or members of the association of persons, as the case may be." This section is no doubt a special enactment relating to Income‑tax, as was ‑held in an unreported case M/s. Chaudhri Muhammad Yusaf and another v. The Collector Multan, etc. (W. P. 395 of 1959) decided on 9th of March 1961 and creates liability of members of an association of persons where any business, profession or vocation carried on by an association of persons has been discontinued, or where an association of persons is dissolved. Its terms are restricted to cases where dissolution or discontinuance has taken place and appears to leave been enacted with a view to enable realisation of arrears of tax as the association of persons had ceased to exist. No difficulty in realisation of. arrears exists where the association of persons continues in business. As Kehror Pacca Co‑operative Shop Limited has neither been dissolved nor has been discontinued, section 44 of the Income‑tax Act has in our view no applica tion. We do not see any force in the contention of the learned counsel for respondent No. 3 that section 44 of Income‑tax Act creates a liability of the members of the society. It does not say so and it is not permissible to extend liability in a fiscal statute unless the intention is clear and manifest. In the absence of a special enactment or provision in the Income‑tax, effect must be given to subsection (2) of section 44 of the Co‑operative Societies Act qua the liability of its members in respect of Government dues. 8. Learned counsel for respondent No. 3 referred us to the decision by Muhammad Yaqub Ali and 'Anwar‑ul‑Haq, JJ. in M/s. Ch. Muhammad Yusaf Co. and another v. The Collector, etc. (W. P. 395 of 1959). This was a case in which the petitioners were members of a Co‑operative Society, which had been assessed to Income‑tax and the arrears of tax were being realised indivi dually as a whole from the petitioners. It was contended on their behalf in this case relying on subsection (2) of section 44 of the Co‑operative Societies Act read with Article 15 of the Articles of Association of the Society that their liability did not extend beyond four times the value of their shares. The society had gone into liquidation and the petitioners' contention was repelled relying on section 44 of the Income‑tax Act. The decision of the petition was founded on the express terms of, section 44 of the Income‑tax Act as being a special law governing recovery of arrears of Income‑tax. The learned Judges said: "Section 44 of the Co‑operative Societies Act, however is in general terms and does not specifically relate to liability for the recovery of Income‑tax or Sales Tax. That subject is specifically dealt with in section 44 of the Income‑tax Act and it is well established the provisions of special law would prevail as against the general law on the subject. Whatever, therefore, be the protection given to the petitioner under bye law 15 of the assessee society and section 44 of the Co‑operative Societies Act, which protection cannot override the express provisions of section 44 of the Income‑tax Act and the decision of this case, therefore, really turns on the interpretation of section 44 of the Income‑tax Act." With the above observations we respectfully agree, but the instant case before us is a converse case. Section 44 (2) of the Co‑operative Societies Act read with Article 15 of the Articles of Association of the society limits their liability of its members to twice the value of their shares and there is no express provision in the Income‑tax Act, which overrides this protection. In other words there is nothing in the special law which overrides the general law relating to the extent of liability of the members of the assessee society (which has not been liquidated) in relation to sums due to Government. 9. Relying : on P. V. A. L. Ramaswami Naicker v. Pudi N. Sokkayya Naicker ((1942) 10 I T R 226) and Venkadadri Somappa v. Narasapally Venkataswami Chetty ((1941) 9 I T R 284), learned counsel for respondent No. 3 also argued that as assessment of the society as association of persons means assessments of the members of the association, the members are individually liable to pay in full arrears of Income‑tax and Sales tax. The second case no doubt holds that "when the income of a partnership is assessed to tax under the Act what is really assessed is nothing less than the income of the individual partners, and we think that to say that a person has been assessed to income‑tax may properly be paraphrased by saying that he has paid income‑tax. In this case it is quite clear that the appellant has been assessed to Income‑tax." These observations were followed in the first case, which decides that when an association of persons is assessed to income‑tax, what is really assessed is the income .of the individual members. In both these cases the question for decision was whether a person who was a member of a firm or association of persons was entitled to claim benefits of the Agriculturists Relief Act, which was not open to a person who had been assessed to Income‑tax. Benefit of the Act having been claimed by a person whose firm in the second case and association of persons in the first case had been assessed to tax, it was held that the benefit was not open to them. These decisions in fact interpret. a provision of Agriculturist Relief Act. It may be mentioned that a contrary view, has been taken in Swaminatha Odayar v. Srinivasa lyer and others ((1939) 2 M L J 495) which holds that a person cannot be `assessed' unless the assessment is made in his name. 10. It appears to us that the answer to the question which is before us depends upon whether the Income‑tax Act creates any liability of the petitioners, when the society has been assessed. The arrears of income‑tax are being realised from the petitioners when the society and not the petitioners has been assessed. Under section 45 of the Income‑tax Act, income‑tax is to be paid by the assessee and where it is not paid within the time specified in the notice of demand, the assessee is deemed in default and then the Income‑tax Officer may under subsection (2) of section 46 of the Income‑tax Act forward a certificate to the Collector specifying the amount of arrear due from the assessee and the Collector shall proceed to recover the amount from such assessee, as if it were an arrears of land revenue. The tax is thus recoverable from the assessee: Section 40, 41 and 42 of the Income‑tax Act create liabilities in special cases, i.e., in the case of guardian, trustee, agent and a Court of Wards, etc., but these sections are not pertinent to the instant case. `Assessee' is defined in subsection (2) of section 2 of the Income‑tax Act as: "A person by whom income or any other sum of money is payable under this Act and includes every person in respect of whom every proceeding under this, Act has been taken for the assessment of his income or of the loss sustained by him or of the amount of refund due to him and every person who is required to file a return of income under section 22." On this definition it does not appear to us that the petitioners can be treated as assessee under section 46 of the Income‑tax; Act. It is the society which is the assessee and the certificate under section 46 (2), Income‑tax Act was issued against the society and not its members, i.e., the petitioners. Therefore, the realisa tion of the arrears from the members under the certificate is not authorised. 11. In view of the above observations, we hold that the petitioners are not liable to pay the amounts sought to be realised from them in excess of twice the value of their shares in the society. 12. We accept this writ petition with costs and direct the respondents not to realise any sum in excess of the`petitioners' liability. K. B. A.Petition accepted.