2010 (9) TMI 966 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge against the notice issued by the Commercial Tax Officer for payment of tax.
2. Applicability of section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985.
3. Interpretation of legal principles regarding recovery of tax in the context of proceedings before BIFR.
4. Comparison with previous judgments and their relevance to the present case.

Analysis:
1. The writ petition challenges a notice by the Commercial Tax Officer demanding payment of Rs. 10,32,185 in tax from November 2007 to August 2009 within seven days. The petitioner-company is under proceedings before BIFR, which is acknowledged in the notice.

2. Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, suspends legal proceedings against an industrial company under certain conditions. The Act prohibits winding up, execution, distress, or suits for recovery of money when specific circumstances, such as pending inquiries or schemes, are present. This provision aims to protect companies undergoing rehabilitation.

3. Previous judgments, including Deputy Commercial Tax Officer v. Corromandal Pharmaceuticals, have addressed the issue of recovery of taxes in cases involving sick industrial companies. The court emphasizes that recovery actions should be subject to BIFR's approval, ensuring fair treatment and adherence to the Act's provisions. The court highlights the need for consent from BIFR before proceeding with recovery actions.

4. The judgment distinguishes the present case from the cited Supreme Court case, emphasizing the failure of the petitioner to comply with the deferral scheme and make timely payments. The court concludes that the impugned notice demanding tax payment is not legally sustainable under section 22 of the Act due to the specific circumstances of the case.

In conclusion, the writ petition is allowed, setting aside the notice for tax payment and directing the respondent to involve in BIFR proceedings for any further actions. The judgment underscores the importance of following legal provisions and seeking appropriate approvals in cases involving sick industrial companies to ensure fair treatment and adherence to statutory requirements.