1988 (1) TMI 333 - HC - VAT and Sales Tax

Issues Involved:
1. Liability of a Government company for sales tax arrears incurred by a unit prior to its acquisition.
2. Applicability of the Amritsar Oil Works (Acquisition and Transfer of Undertakings) Act, 1982.
3. Interpretation of Section 6, 7, 14, 16, 17, and 21 of the Amritsar Oil Works (Acquisition and Transfer of Undertakings) Act, 1982.
4. Relevance of Section 17 of the Punjab General Sales Tax Act, 1948.
5. Jurisdiction and maintainability of writ petitions under Article 226 of the Constitution.

Detailed Analysis:
1. Liability of a Government Company for Sales Tax Arrears:
The petitioner, a government company, contended that it was not liable to pay sales tax arrears incurred by Amritsar Oil Works before the appointed day (19th October 1982). The court noted that Section 6 of the Amritsar Oil Works (Acquisition and Transfer of Undertakings) Act, 1982, specifically states that liabilities incurred before the appointed day are enforceable against the Amritsar Sugar Mills Company and not against the Central Government or the government company.

2. Applicability of the Amritsar Oil Works (Acquisition and Transfer of Undertakings) Act, 1982:
The Act came into force on 19th October 1982, and Section 3 provided that on the appointed day, the Amritsar Oil Works and the right, title, and interest of the Amritsar Sugar Mills Company would vest in the Central Government. Section 5(1) of the Act further transferred the property to the petitioner company. The court emphasized that the Act's provisions override any inconsistent laws, as stated in Section 21.

3. Interpretation of Relevant Sections of the Act:
- Section 6: It was clear that the liabilities of the Amritsar Sugar Mills Company in relation to the Amritsar Oil Works for any period before the appointed day are enforceable against the original company and not the Central Government or the petitioner.
- Section 7: The Central Government paid a specific amount for the transfer and vesting of the Amritsar Oil Works, which was to be used by the Commissioner of Payments to satisfy various claims, including taxes.
- Section 14: Appointment of a Commissioner of Payments to disburse amounts payable under Section 7.
- Section 16: Prioritization of claims, including taxes, to be paid from the amount deposited by the Central Government.
- Section 17: Claims against the Amritsar Sugar Mills Company must be made to the Commissioner within a specified period.
- Section 21: The Act's provisions have an overriding effect over any inconsistent laws.

4. Relevance of Section 17 of the Punjab General Sales Tax Act, 1948:
The respondents argued that under Section 17 of the Punjab Act, the petitioner, as the transferee, was liable for the sales tax dues. However, the court held that Section 21 of the Amritsar Oil Works Act overrides this provision, and the liabilities incurred before the appointed day must be recovered from the Commissioner of Payments.

5. Jurisdiction and Maintainability of Writ Petitions:
The respondents raised preliminary objections, arguing that the petitioner should have used alternative remedies under the Punjab Act and that appeals were pending before statutory authorities. The court dismissed these objections, stating that the statutory remedies pertained to the quantum of sales tax, not the liability of the petitioner to pay the amount. The court also noted that a petition pending in the Supreme Court related to the constitutional validity of a different section of the Punjab Act and did not impede the current writ petitions.

Conclusion:
The court allowed the writ petitions, quashing the demand notices and recovery certificates. It held that the respondents could not enforce the sales tax liability against the petitioner and must approach the Commissioner of Payments for recovery. The court emphasized that the liability incurred before the appointed day was not enforceable against the petitioner due to the overriding provisions of the Amritsar Oil Works (Acquisition and Transfer of Undertakings) Act, 1982.

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