1997 (9) TMI 570 - HC - VAT and Sales Tax

Summary

Issues:
1. Quashing of order attaching bank account for arrear taxes of a closed textile mill.
2. Interpretation of Bhaskar Textile Mills (Acquisition and Transfer) Act, 1986 regarding liability for arrear taxes.
3. Conflict between provisions of the Acquisition Act and Orissa Sales Tax Act, 1947.
4. Priority of liabilities under the Acquisition Act for recovery from the petitioner.
5. Validity of the order of attachment under section 13-A(i) of the O.S.T. Act.

Analysis:

1. The petitioner sought to quash an order attaching their bank account for arrear taxes of a closed textile mill, Bhaskar Textile Mills. The mill was acquired by the State Government under the Bhaskar Textile Mills (Acquisition and Transfer) Act, 1986. The petitioner contested the liability for pre-vesting taxes, arguing that the liability should not be enforced against them.

2. The Acquisition Act deemed the textile undertaking to include all assets and liabilities of the erstwhile owner up to the date of vesting. The liability for pre-vesting taxes remained with the owner as per section 5 of the Act. The petitioner was held liable for taxes due before the date of vesting, as specified in demands under both Central and State Acts.

3. While the O.S.T. Act allows recovery of tax liability from a transferee of a business, the special provisions of the Acquisition Act override general statutes. Section 24 of the Acquisition Act explicitly states its supremacy over other laws. Therefore, the liability of the petitioner was determined by the provisions of the Acquisition Act, superseding the O.S.T. Act.

4. The Acquisition Act provided for the appointment of a Commissioner of Payments to handle claims against the erstwhile owner. Section 18 categorized liabilities for priority in payment, ensuring that statutory dues of the Government for the period pre-vesting were recoverable from the petitioner only after satisfying higher priority claims.

5. The High Court held that the order of attachment under section 13-A(i) of the O.S.T. Act could not be sustained due to the specific provisions of the Acquisition Act governing the recovery of pre-vesting liabilities. The court quashed the attachment order, allowing the writ application without costs.

In conclusion, the judgment clarified the liability of the petitioner for pre-vesting taxes under the special provisions of the Acquisition Act, emphasizing the priority of claims and overriding effect of the special statute over general laws.