2009 (6) TMI 934 - HC - VAT and Sales Tax

What is the date for an application for registration as dealer under rule 7(1)(ai) of the Bombay Sales Tax Rules, 1959, where a company court passes an order of amalgamation? Held that - No order of a court should visit a party with liabilities and/or undesirable consequences in the matter of tax. The rule must be so read as to give effect to the legislative mandate. The date for applying for registration under section 19(6) for a company, can only be the date of the company court s order. If within sixty days of such order an application is made, then the expression succession to business in rule 7(1)(ai) will also be so read. Under rule 8(3)(a)(iii) then it will be the date the company court has ordered or the date provided in the scheme which will be the date of succession to business. This would obviate any difficulty to a party till such time the delegate makes a specific provision in rule 8.

Issues Involved:
1. Determination of the date for an application for registration as a dealer under rule 7(1)(ai) of the Bombay Sales Tax Rules, 1959, in the context of a court-ordered amalgamation.
2. Consequences of filing the application for registration beyond the stipulated period.
3. Interpretation of relevant provisions under the Bombay Sales Tax Act, 1959, and the Central Sales Tax Act, 1956, in relation to amalgamation.

Issue-wise Detailed Analysis:

1. Determination of the Date for Application for Registration:
The primary issue is to determine the appropriate date for an application for registration as a dealer under rule 7(1)(ai) of the Bombay Sales Tax Rules, 1959, when a company court passes an order of amalgamation. The petitioner, a public company, merged with another company, M/s. Floatglass India Limited, effective from April 1, 2002, as per the court's order dated July 24, 2003. The petitioner applied for registration on August 19, 2003, beyond the sixty-day period stipulated under rule 7(1)(ai). The court held that the date of succession to the business should be the date of the court's order sanctioning the scheme of amalgamation. It was noted that procedural requirements in the company court often extend beyond sixty days, making it impractical to adhere to the stipulated timeframe. Therefore, the application date for registration should be counted from the date of the court's order.

2. Consequences of Filing the Application Beyond the Stipulated Period:
The registering authority granted the registration certificate effective from August 19, 2003, since the application was filed beyond the sixty-day period from the date of change in constitution. Consequently, the petitioner remained an unregistered dealer (URD) from April 1, 2002, to August 18, 2003, incurring various disabilities, including the conversion of sales transactions into branch transfers, as established by the Supreme Court in Marshall Sons and Co. (India) Ltd. v. Income-tax Officer [1997] 223 ITR 809. The court emphasized that procedural rules must be interpreted to give effect to the company court's order, and the date of application for registration should be considered from the date of sanctioning the scheme of amalgamation.

3. Interpretation of Relevant Provisions:
The court examined sections 19(4) and 19(6) of the Bombay Sales Tax Act, 1959, and rules 7 and 8 of the Bombay Sales Tax Rules, 1959. Section 19(6) mandates that a successor in business must apply for registration within sixty days of succession. Rule 7(1)(ai) specifies that the application must be made within sixty days from the date of succession. Rule 8(3) stipulates that if the application is made within the specified period, the registration takes effect from the date of succession; otherwise, it takes effect from the date of application. The court noted that rule 7(1)(ai) was introduced by an amendment, and no corresponding provision was made in rule 8(3) to cover the eventuality of transfer of business under a scheme of amalgamation. Therefore, the court held that the time for making an application for registration should be sixty days from the date of the court's order, and the registration should be effective from the anterior date provided in the scheme of amalgamation.

Conclusion:
The court concluded that the petition must succeed, and the petitioner should be granted a fresh registration certificate effective from April 1, 2002, as approved by the court in its order dated July 24, 2003. This interpretation ensures that no party is disadvantaged due to procedural ambiguities or lacunae, and the legislative mandate under the BST and CST Acts is upheld. The court issued a writ of mandamus directing the respondent to issue the registration certificate accordingly.

Order:
The petition is allowed, and the respondent is directed to issue a fresh registration certificate effective from April 1, 2002. There shall be no order as to costs.

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