- 1 - NC: 2025:KHC:13560 WP No. 4671 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1ST DAY OF APRIL, 2025 BEFORE THE HON'BLE MR JUSTICE N S SANJAY GOWDA WRIT PETITION NO. 4671 OF 2025 (KLR-RR/SUR) BETWEEN: 1. THE HANUMAN TRANSPORT COMPANY PRIVATE LIMITED A COMPANY REGISTERED UNDER THE COMPANIES ACT 2013, 76, BADAGABETTU, POST BOX NO. 27, UDUPI 576101. REPRESENTED BY ITS MANAGING DIRECTOR, RAVINDRA SHETTY, AGED ABOUT 35 YEARS. …PETITIONER (BY SRI. PRAVEENKUMAR HIREMATH., ADVOCATE) AND: 1. STATE OF KARNATAKA DEPARTMENT OF REVENUE, AMBEDIKAR VEEDI, VIDHANSOUDHA, BENGALURU - 560001. REP. BY ITS CHIEF SECRETARY. 2. TAHASHILDAR OF UDUPI TALUK CIRCUIT HOUSE ROAD, BANANJE, UDUPI, KARNATAKA - 576101. 3. DEPUTY COMMISSIONER OF COMMERCIAL TAXES (DGSTO) VANIJYA TERIGE BHAVANA, MAIDHAN ROAD, MANGALORE, 575001. …RESPONDENTS (BY SRI. HEMA KUMAR., AGA) Digitally signed by KIRAN KUMAR R Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:13560 WP No. 4671 of 2025 THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO CALL FOR ENTIRE RECORDS PERTAINING TO ISSUANCE OF ORDER NO. TAX-CR- 40/2020-21 DTD. 09.03.2021 PASSED BY R-2 (PRODUCED AS ANNX-A), ETC. THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE N S SANJAY GOWDA ORAL ORDER 1. On 09.03.2021, the Thasildar passed an order directing the entry of an encumbrance in respect of land bearing Sy.No.150/2 measuring 1 acre 11 guntas and land measuring Sy.No.150/3 measuring 1 acre 22 guntas in column No.11 of RTC, as per the request of the Department of Commercial Taxes letter dated 09.03.2021. 2. The petitioner, thereafter, submitted a request to the Deputy Commissioner of Commercial Taxes to withdraw this letter and for removal of said encumbrance. The petitioner i.e., Hanuman Transport Company Private Limited indicated that they have no liability whatsoever to the Department - 3 - NC: 2025:KHC:13560 WP No. 4671 of 2025 of Commercial Taxes and, therefore, the entry regarding encumbrance in their land was incorrect. The Deputy Commissioner of Commercial Taxes, however, took the view that Hanuman Transport Company Private Limited held a 42.5% share holder in Hanuman Motors Private Limited and it was essentially a 'sister concern' of Hanuman Transport Company and, therefore, an entry could be made in the RTC regarding the alleged arrears. 3. Being aggrieved by this order, the petitioner is before this Court. 4. Learned counsel for the petitioner contends that there is essentially no provision which enables the Department of Commercial Taxes to request an entry to be made in the revenue records regarding alleged arrears of any kind of tax. 5. It is also contended that Section 44 of the Karnataka Value Added Tax Act, 2003 (ACT), which provides for - 4 - NC: 2025:KHC:13560 WP No. 4671 of 2025 a special provision related to Companies only enables the Authorities to go against the Director of Company, if it is found that the properties have been purchased out of the funds of the Company and at any rate there is no provision which enables the Revenue to proceed against the 'sister concern'. 6. Learned counsel appearing for the Revenue, on the other hand, contends that so long as the petitioner owns 42.5% shares in Hanuman Motors Transport Private Limited, the State was entitled to proceed against the parent Company since essentially Hanuman Motors was a Sister Company. This ought to be contended that if a parent Company owns nearly 43% of shares, their liability would also be to said extent and as a consequence, in any property owned by the parent Company, an entry can be made in the revenue records. 7. It cannot be in dispute that the only legal provision which entitles the Revenue to proceed against a - 5 - NC: 2025:KHC:13560 WP No. 4671 of 2025 Company is the special provision created under Section 44 of the Act. Since Section 44 of the Act only permits the Revenue to proceed against a Director of the Company, the question of the State contending that they can also proceed against the parent Company or a subsidiary Company cannot be accepted. Unless there is a specific provision which enables the Authorities to seek for creation of an Encumbrance in respect of a parent Company or a subsidiary Company. 8. The request of the Revenue to make an entry in the revenue records regarding the alleged arrears of tax cannot be sustained. Consequently, the impugned endorsement is quashed and the Thasildar is directed to remove the entry made in Column No.11 of the RTC pursuant to the order dated 09.03.2021 (Annexure-A). 9. It is, however, made clear that the right of the State to proceed against the defaulter i.e., Hanuman - 6 - NC: 2025:KHC:13560 WP No. 4671 of 2025 Motors Company is unhindered by this order and they are at liberty to proceed against them in accordance with law. This Writ Petition is, accordingly, disposed of. 10. In view of the disposal of the petition, all pending interlocutory applications, if any, stand disposed of. SD/- (N S SANJAY GOWDA) JUDGE HNM List No.: 1 Sl No.: 22