2008 (2) TMI 834 - HC - VAT and Sales Tax

Recovery proceedings for recovery of old arrears - Held that - In view of section 22 of the SICA Act when an appeal is pending proceedings for the winding up of the industrial company or for execution or the like against any of the properties of the industrial petitioner-company shall not lie or be proceeded with except with the consent of the AAIFR. As it has been admitted by the counsel for the petitioner that while passing the order dated May 24, 2004 the BIFR has sent its opinion to this court under section 20(1) of the SICA Act for winding up of the petitioner-company and the matter is pending before the company judge. However, no hearing has taken place so far. Thus in view of this fact alone we are not inclined to invoke the writ jurisdiction of this court for the relief prayed, as the company judge/court is already seized of the matter and the petitioner may seek any of the relief there. Appeal dismissed.

Summary

Issues:
1. Challenge to demand of tax by respondent-authority during pendency of appeal before AAIFR.
2. Protection under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985.
3. Locus standi of the petitioner to seek writ of certiorari.
4. Legality of tax demand by respondent-department.

Analysis:

1. The petitioner filed a writ petition challenging the demand of tax by the respondent-authority while an appeal was pending before the AAIFR. The petitioner argued that under Section 22 of the SICA Act, proceedings for recovery of old arrears should be deferred during the appeal process. However, the court noted that the BIFR had already sent its opinion for winding up the petitioner-company, and the matter was pending before the company judge. As an appeal under Section 25 of the SICA Act was also pending before the AAIFR, the court held that the appropriate forum for relief was the AAIFR, dismissing the writ petition.

2. The petitioner sought protection under Section 22 of the SICA Act, which prohibits proceedings for winding up or execution against the company's properties during the pendency of an appeal. The court acknowledged the existence of the appeal under Section 25 before the AAIFR and emphasized that the AAIFR was competent to grant necessary relief. Therefore, the court dismissed the writ petition, granting the petitioner liberty to seek alternative remedies available under the law.

3. The respondents contested the petitioner's locus standi to seek a writ of certiorari, arguing that the company had not availed the remedy of appeal provided under the relevant tax laws. The court considered this argument and highlighted that the petitioner could approach the appropriate forum for relief, given the pending appeal before the AAIFR. The court's decision to dismiss the writ petition was based on the availability of alternative remedies and the jurisdiction of the AAIFR in granting relief.

4. The respondents also defended the legality of the tax demand, stating that it was raised in accordance with the law. The court did not delve into the specifics of the tax demand but focused on the procedural aspects of the case, directing the petitioner to seek relief through the established legal channels. The dismissal of the writ petition underscored the court's emphasis on utilizing the appropriate forums for addressing legal grievances and seeking redressal within the statutory framework.