1993 (10) TMI 328 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of revenue recovery proceedings pending disposal of appeals.
2. Applicability of equitable principles in tax recovery under the TNGST Act.
3. Interpretation of statutory provisions under the TNGST Act regarding tax recovery.

Detailed Analysis:

1. Legality of Revenue Recovery Proceedings Pending Disposal of Appeals:
The petitioner, M/s. Khan Plastics, challenged the distraint order issued by the Commercial Tax Officer for the recovery of tax arrears pending the disposal of their appeals. The petitioner argued that revenue recovery proceedings should not be initiated while appeals are pending. The court examined the provisions under the Tamil Nadu General Sales Tax Act (TNGST Act) and concluded that the tax due or other amounts payable under the TNGST Act do not cease to be due or get eclipsed even temporarily the moment an appeal or revision is filed. The court emphasized that unless there is a specific direction from the appellate or revisional authority to stay the recovery, the proceedings for recovery of tax can continue.

2. Applicability of Equitable Principles in Tax Recovery Under the TNGST Act:
The petitioner argued that initiating revenue recovery proceedings during the pendency of appeals was an extreme step and would result in a distress sale of the property, causing irreparable harm. The court, however, rejected this argument, stating that in a taxing statute like the TNGST Act, there is no room for any emotive appeal to equity. The court held that the specific provisions of the TNGST Act govern the situation and that general principles of law or equity cannot override these statutory provisions.

3. Interpretation of Statutory Provisions Under the TNGST Act Regarding Tax Recovery:
The court undertook a detailed analysis of various sections of the TNGST Act, including sections 3, 4, 5, 6, 7, 12, 13, 16, 24, 25, 26, 29, 31, 31-A, 33, 35, 36, 37, and 38, along with relevant rules. The court noted that the TNGST Act provides a comprehensive scheme for the assessment, levy, and collection of tax, including specific methods for recovery of tax dues. The court highlighted that section 24(1) prescribes that tax assessed or payable must be paid within the time specified in the notice of assessment or demand. The court further clarified that the filing of an appeal or revision does not bar the recovery of tax due unless there is a specific stay order from the appellate or revisional authority.

The court also referred to the proviso to section 24(2), which states that no recovery proceedings shall be taken or continued as long as the dealer has complied with an order by any of the authorities to whom the dealer has appealed or applied for revision. However, in the absence of such compliance or specific directions to stay recovery, the tax due remains recoverable.

The court concluded that the legislative intent is clear that the tax due or other amounts payable under the TNGST Act are immediately recoverable, and the mere filing of an appeal or revision does not postpone the recovery. The court dismissed the writ petition, stating that the recovery proceedings initiated by the second respondent were in accordance with the law.

Conclusion:
The court dismissed the writ petition and the accompanying W.M.P., holding that the recovery proceedings initiated by the Commercial Tax Officer were lawful and in accordance with the provisions of the TNGST Act. The court emphasized that the statutory provisions under the TNGST Act govern the recovery of tax dues, and equitable principles cannot override these provisions. Consequently, the petitioner's arguments were rejected, and the distraint order was upheld.