2015 (10) TMI 2457 - SC - VAT and Sales Tax

Demand of outstanding tax from purchaser of auctioned property - Held that - official liquidator in order to effect the sale of the assets of the company in liquidation had issued a tender notice. Pursuant to the notice so issued, the appellant had offered his highest bid which was inclusive of all the taxes payable under the Kerala General Sales Tax Act, 1963 and the Central Sales Tax Act, 1956 and also the dues payable under other statutory levies.The offer so made was accepted by the official liquidator. - there is a concluded contract between the official liquidator and the appellant-company herein. We reiterate that while making the offer, the appellant-company had specifically indicated to the official liquidator of the company in liquidation that the offer made by him is inclusive of all statutory levies. In view of that, the liability to pay taxes cannot be imposed the appellant-company herein. - appellant discharged from payment of any demands from either the official liquidator or from the sales tax department of the State in respect of the sale of Items 1-2 of the tender notice dated 26.11.2001. - Decided in favour of assessee.

Issues:
1. Challenge to orders passed by Division Bench of High Court in Review Petition
2. Winding up of M/s. Premier Cable Company Ltd. under Section 433F of Companies Act, 1956
3. Sale of assets of company in liquidation
4. Acceptance of tender offer by appellant-company
5. Dispute over payment of taxes on sale of assets

Analysis:

1. The appellant challenged the orders passed by the Division Bench of the High Court in a Review Petition. The Review Petition was filed against the order of the High Court in M.F.A. No.1394 of 2002. The primary issue raised in this appeal was the validity of the orders passed by the Division Bench.

2. M/s. Premier Cable Company Ltd. was ordered to be wound up for default under Section 433F of the Companies Act, 1956. The official liquidator took control of the company in liquidation and issued a notice inviting tenders for the sale of assets. The focus of the appeal was on Items 1-2 of the notice, which included machineries and electrical installations.

3. The appellant-company submitted a tender offer for the purchase of Lot No. 1-2. The offer explicitly stated the total amount inclusive of all statutory levies. The Company Judge accepted the offer made by the appellant-company.

4. A dispute arose when the appellant requested the sales tax registration number in the sales tax certificate to move the properties beyond Kerala's boundaries, which was rejected by the official liquidator. The appellant's bid, inclusive of all taxes, was accepted by the official liquidator, leading to a concluded contract between them.

5. The Supreme Court held that the appellant-company's offer clearly stated that it was inclusive of all statutory levies. Therefore, the liability to pay taxes could not be imposed on the appellant. The Court disposed of the appeal, discharging the appellant from any demands for payment of taxes on the sale of Items 1-2 of the tender notice.

6. Additionally, the Court directed the return of the bank guarantee offered by the appellant-company in view of the interim order. The appeal was allowed in favor of the appellant-company, and the respondent was instructed to return the bank guarantee within a month from the date of the order.

This detailed analysis covers the various issues involved in the legal judgment, providing a comprehensive overview of the key points addressed by the Supreme Court in its decision.

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