2004 (10) TMI 557 - HC - VAT and Sales Tax

Summary

Issues:
1. Recovery notices seeking quashment under articles 226 and 227 of the Constitution of India.
2. Interpretation of the rehabilitation package granted by the Board for Industrial Finance and Reconstruction (BIFR) under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA).
3. Dispute over recovery of sales tax arrears post-sanction of the rehabilitation scheme.
4. Application of section 22(1) of the SICA regarding recovery of sales tax.
5. Legal proceedings and judgments cited in support of both parties' arguments.
6. Determination of recoverable sales tax amount and directions for recovery process.

Analysis:
The petitioners filed a writ petition seeking the quashment of recovery notices related to sales tax arrears issued after the sanction of a rehabilitation package by the BIFR under the SICA. The petitioners argued that the rehabilitation scheme deferred sales tax dues for ten years, and recovery without BIFR permission was impermissible. The State-respondents acknowledged the scheme but contended that recovery was justified for sales tax collected post-scheme sanction. The court analyzed section 22(1) of the SICA and relevant case law, including Deputy Commercial Tax Officer v. Corromandal Pharmaceuticals, to determine recoverability. It held that post-scheme sales tax was recoverable, while pre-scheme tax was deferred. The court directed recovery based on assessed amounts up to 1999 and subsequent returns for later years, allowing further recovery post-assessment order. The judgment quashed certain notices, outlined recovery amounts, and instructed the respondents to release funds and bank account access within a specified timeframe. The judgment balanced the rights of the parties and provided a detailed framework for sales tax recovery in line with legal provisions and precedents.