1997 (2) TMI 519 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Entitlement to protection under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985.
2. Validity of certificate case No. 9 ST/AW/1996-97 and the notice dated November 28, 1996.
3. Jurisdiction of the West Bengal Taxation Tribunal.

Issue-wise Detailed Analysis:

1. Entitlement to protection under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985:
The primary question was whether the applicant company was entitled to the protection of Section 22 of the Act of 1985 against proceedings for the realization of sales tax and interest under the Bengal Finance (Sales Tax) Act, 1941. The applicant company was declared a sick company on September 15, 1987, and the BIFR appointed the Industrial and Financial Corporation of India to formulate a revival scheme. Despite a scheme being sanctioned in February 1991, it was not implemented due to the failure of financial institutions to provide the necessary funds. The BIFR's order dated March 17, 1993, indicated that the sanctioned scheme had lapsed and a revised scheme was required. Since no revised scheme was submitted, the Tribunal concluded that none of the pre-requisites of Section 22(1) existed, and therefore, the applicants were not entitled to its protection.

2. Validity of certificate case No. 9 ST/AW/1996-97 and the notice dated November 28, 1996:
The applicants challenged the validity of certificate case No. 9 ST/AW/1996-97 and the notice dated November 28, 1996, which prohibited the operation of their bank account. The Tribunal noted that the High Court had stayed the BIFR's order dated September 21, 1994, which directed the submission of a revised rehabilitation scheme. However, the BIFR's earlier order dated March 17, 1993, which indicated the failure of the sanctioned scheme, was not stayed. The Tribunal found that since the sanctioned scheme had failed and no revised scheme was under consideration or preparation, the applicants were not entitled to protection under Section 22 of the Act of 1985. Consequently, the certificate case and the impugned notice were validly initiated and issued.

3. Jurisdiction of the West Bengal Taxation Tribunal:
The Tribunal clarified its jurisdiction, stating that it exercises jurisdiction as a substitute for the High Court in matters related to the Bengal Finance (Sales Tax) Act, 1941, and the West Bengal Sales Tax Act, 1954. However, it does not have jurisdiction over the assessment of tax or interest under the Central Sales Tax Act, 1956. This distinction was crucial in determining the Tribunal's authority to adjudicate the issues raised by the applicants.

Conclusion:
The Tribunal concluded that the applicants were not entitled to the protection of Section 22 of the Act of 1985, and therefore, the certificate case No. 9 ST/AW/1996-97 and the notice prohibiting the operation of the bank account were valid. The application was dismissed without any order for costs.