1995 (9) TMI 291 - SC - VAT and Sales Tax

Whether section 22 qualifies section 6 in any manner? Whether it makes the appellant-corporation liable to issue declaration forms for purchases made prior to April 23, 1984? Held that - The High Court has understood section 22 to mean that unless the existence of circumstances mentioned in proviso (a) are made out in these proceedings, the appellant-corporation would be bound by any contract made by Ganesh Flour Mills for supply of any goods prior to its vesting in the Central Government which is unagreeable as reading of section 22 shows that unless ratified in writing within thirty days of the appointed day, no contract entered into by Ganesh Flour Mills prior to January 28, 1984 (appointed day) shall be binding upon the Central Government/Government company. The appeals are accordingly allowed in part. It is declared that in respect of the contracts entered into and supplies received by the appellant-corporation on or after April 23, 1984, the appellant-corporation shall either furnish form III-Kha or if it cannot do so, it shall reimburse the respondents-writ petitioners in full for the difference amount of tax which the respondents were made to pay to the State on account of the appellant s failure to furnish declaration forms to the respondents in that behalf. But so far as the orders placed or supplies made prior to April 23, 1984 is concerned, the appellant-corporation is not liable either to furnish the declaration forms to the respondents-writ petitioners or to reimburse them in any manner.

Summary

Issues Involved:
1. Liability of the appellant-corporation to issue declaration forms (form III-Kha) for the period prior to April 23, 1984.
2. Liability of the appellant-corporation to issue declaration forms (form III-Kha) for the period subsequent to April 23, 1984.
3. Whether the appellant-corporation should reimburse the selling dealers for the difference in tax and penalties if declaration forms cannot be issued.
4. Applicability of Section 22 of the Ganesh Flour Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1984, in conjunction with Section 6 of the same Act.

Analysis of Judgment:

1. Liability for Period Prior to April 23, 1984:
The court examined the provisions of the Ganesh Flour Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1984, particularly Section 6. It was determined that any liability of Ganesh Flour Mills prior to the date of vesting in the Central Government (January 28, 1984) shall not be enforceable against the Central Government or the appellant-corporation. The court noted that the obligations in question were not specified under sub-section (2) of Section 6, which would make them enforceable. Consequently, the appellant-corporation is not liable to issue declaration forms (form III-Kha) or reimburse the selling dealers for the period prior to April 23, 1984.

2. Liability for Period Subsequent to April 23, 1984:
The court held that the appellant-corporation, having placed orders for tins and received supplies on the basis of an undertaking to supply declaration forms (form III-Kha), cannot refuse to issue these forms on the grounds that the tins were used for purposes other than those specified in Section 4-B(2) of the Uttar Pradesh Sales Tax Act. The court emphasized that the user for other purposes was a voluntary act by the corporation, and it must bear the consequences. Therefore, the High Court's direction to issue the declaration forms was upheld.

3. Reimbursement for Tax and Penalties:
The court modified the High Court's direction, noting that due to the time lapse, the assessments of the respondents under the Uttar Pradesh Act must have been completed long ago, making the filing of declaration forms impractical. The modification provided that if the appellant-corporation cannot issue the declaration forms, it must reimburse the respondents-selling dealers for the difference in tax and any interest or penalties imposed and paid by them. The court rejected the appellant-corporation's argument that it should only reimburse the difference in tax and not the interest, stating that there was no justification for such a plea.

4. Applicability of Section 22:
The court analyzed Section 22 and its interaction with Section 6. It concluded that Section 22 does not qualify Section 6 in a manner that would make the appellant-corporation liable for contracts entered into by Ganesh Flour Mills prior to January 28, 1984, unless ratified in writing within thirty days from the appointed day. The court noted that the writ petitions were not proceedings questioning the non-ratification of any particular contract within thirty days of the date of vesting. Therefore, any liability for the period prior to April 23, 1984, remains with the Central Government, not the appellant-corporation.

Conclusion:
The appeals were allowed in part. The appellant-corporation is required to either furnish form III-Kha for contracts and supplies received on or after April 23, 1984, or reimburse the respondents for the difference in tax, interest, and penalties. However, for the period prior to April 23, 1984, the appellant-corporation is not liable to furnish the declaration forms or reimburse the respondents. No costs were awarded.