2004 (7) TMI 348 - HC - Companies Law

Summary

Issues:
Waiver of penalty under section 31(2) of the Wealth-tax Act.

Analysis:
The judgment involves a petition filed by the official liquidator seeking a waiver of the penalty imposed by the respondent on wealth-tax under section 31(2) of the Wealth-tax Act. The relevant provisions of the Wealth-tax Act, specifically sections 30 and 31, were considered. Section 31 outlines the consequences of non-payment within the specified period, including the liability to pay interest. Additionally, section 31(2A) grants the Chief Commissioner or Commissioner the authority to reduce or waive interest under certain circumstances, such as genuine hardship to the assessee or default beyond the assessee's control.

The court referred to a previous order concerning the waiver of interest related to income tax, emphasizing the power of the court under section 446(2)(b) of the Companies Act, 1956, to override other laws in specific cases where statutory interest would cause hardship. The court highlighted the importance of assessing whether the claim for interest would result in hardship or injury to the parties involved. The court noted that the interest component or disputed liability should not be enforced if it arose without fault on the company's part.

Furthermore, the judgment compared the provisions of sections 156 and 220 of the Income-tax Act with those of the Wealth-tax Act, noting their similarity. The court highlighted the official liquidator's obligations under section 529A of the Companies Act to prioritize certain debts, including taxes, and discharge them accordingly. In this case, the delay in paying wealth tax was attributed to the adjudication of claims by secured creditors, which was not the fault of the company. The court affirmed its authority to waive interest and penal interest in appropriate cases, ultimately ruling that the respondent's claim for interest was unsustainable in law.

The court directed the official liquidator to pay the wealth-tax liability of Rs. 68,65,681 to the respondent within two weeks from the date of the order. The judgment concluded by stating that the application was ordered accordingly, with no costs incurred, and the connected Company Application was closed.