2015 (9) TMI 305 - HC - VAT and Sales Tax

Maintainability of Suit Statutory Bar to entertain Suit Plaintiff s company was unable to repay its debt and Haryana financial corporation took possession of company including its pledged buildings, machinery, land etc and were put to auction Simultaneously company failed to provide C-form and assessing authority under Haryana General Sales Tax Act, 1973 consequently served summons to make payment of amount due Plaintiff seeking proper remedies and to be allowed to still furnish C-forms Held that - There was clear bar in Sub Sections 1 and 2 of Section 62 of Act, 1973 that civil courts were statutorily divested of jurisdiction to entertain suits under section 9 of CPC There was not only bar on civil court but ordinarily even writ petition was not maintainable Suit filed by plaintiff was wholly misconceived and not maintainable before civil court and was clearly in abuse of process of law Therefore, appeal dismissed Decided against Plaintiff.

Summary

Issues involved:
1. Failure to repay business loan leading to possession of company assets by HFC.
2. Non-compliance with tax liabilities under Central Sales Tax Act, 1956.
3. Jurisdiction of civil court to entertain suits regarding tax matters.
4. Availability of alternative remedies under sales tax law.
5. Maintainability of the suit for permanent injunction against tax authorities.

Analysis:

1. The company, unable to repay a business loan taken from Haryana Financial Corporation (HFC) and Punjab & Sind Bank, had its assets seized by HFC in 2002. Subsequently, the company's properties were auctioned in 2003 due to default in loan repayment.

2. The plaintiff, not an original director of the company, faced issues regarding furnishing C-forms for tax liabilities under the Central Sales Tax Act, 1956. Despite extensions granted by the assessing authority, the plaintiff failed to submit the required forms, leading to payment demands and summons for outstanding amounts.

3. Instead of seeking remedies under the Sales Tax Act, the plaintiff filed a suit for permanent injunction against coercive actions by tax authorities. The defendants contended that the civil court lacked jurisdiction to entertain the suit, emphasizing the availability of remedies under the State and Central Sales Tax laws.

4. The defense argued that Section 62 of the Haryana General Sales Tax Act, 1973 barred civil courts from adjudicating matters related to tax assessments. The court highlighted the principle that regular courts should refrain from interfering in tax matters to safeguard government revenues essential for development programs.

5. The court deemed the plaintiff's suit as misconceived and an abuse of legal process, emphasizing the exclusive jurisdiction of taxing authorities over C-form issues. The appeal was dismissed, with the plaintiff advised to pursue available remedies through the statutory process before approaching the High Court if dissatisfied.

6. The court allowed the plaintiff to address the C-form issue before tax authorities as per law, citing precedents permitting submission of C-forms at any stage of assessment proceedings. The dismissal of the appeal was based on maintainability grounds, emphasizing the need to follow statutory procedures in tax matters.