2016 (1) TMI 1157 - HC - VAT and Sales Tax

Recovery of arrears of Sales Tax - Sick industrial unit - Held that - the decision in Raheja Universal did not take a different view but actually affixes the seal of approval, on the view taken in Corromandal Pharmaceuticals 1997 (3) TMI 452 - SUPREME COURT OF INDIA wherein it was held that scheme for rehabilitation or restructuring of a sick industrial company undertaken by a specialized body like the BIFR/AAIFR should, as far as legally permissible, remain obstruction free and the events should take place as pre-ordained, during consideration and successful implementation of the formulated scheme - jurisdiction is vested in BIFR/AAIFR to issue directives, declarations and prohibitory orders within the rationalized scope and limitations prescribed under Section 22(1), 22(3) and 22A of the Act of 1985 - Appeal is dismissed.

Summary

Issues:
Challenge to proposed action under Revenue Recovery Act for recovery of arrears of Sales Tax based on declaration as Sick Industry under Sick Industrial Companies Act, 1985.

Analysis:
The appellant challenged the respondent's proposed action under the Revenue Recovery Act for recovering arrears of Sales Tax, contending being declared a Sick Industry under the Sick Industrial Companies Act, 1985. The Writ Petition was dismissed based on the precedent set by the Supreme Court in the case of Deputy Commercial Tax Officer vs. Corromandal Pharmaceuticals, where the recovery of sales tax dues from a sick industrial company post-rehabilitation scheme approval was held beyond the scope of the Sick Industrial Companies Act, 1985. The appellant argued that this view was clarified by the Supreme Court in Raheja Universal Limited vs. NRC Limited, emphasizing matters connected with the scheme's sanctioning and implementation fall under the ambit of the Sick Industrial Companies Act, 1985.

The Court noted that the decision in Raheja Universal did not differ from the principles established in Corromandal Pharmaceuticals, as clarified in paragraph No.52 of the Raheja Universal case. The Court highlighted that the recovery of arrears of sales tax, which the appellant collected but did not remit to the Department, was not covered under the protection of the Sick Industrial Companies Act, 1985. The Court emphasized that Raheja Universal primarily dealt with claims outside a Rehabilitation Scheme, unlike the present case involving arrears of sales tax collection by the appellant.

Regarding the Division Bench's decision in a related case, the Court observed that it did not adequately address the distinction between the judgments of Corromandal Pharmaceuticals and Raheja Universal. The Court concluded that the decision in Raheja Universal did not deviate from the principles set in Corromandal Pharmaceuticals, affirming the latter's view on recovery of statutory liabilities under taxing statutes.

Ultimately, the Court upheld the dismissal of the Writ Petition by the learned Single Judge, finding no reason to interfere with the order. The Court emphasized that the decision in Raheja Universal did not alter the principles established in Corromandal Pharmaceuticals, leading to the dismissal of the Writ Appeal.