1991 (2) TMI 283 - HC - Central Excise

Issues Involved:
1. Refusal to issue declaration forms under the Sales Tax Act due to arrear Sales Tax dues.
2. Interpretation of Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985.
3. Jurisdiction of the Court concerning Central Sales Tax matters.
4. Applicability of the Bengal Finance Sales Tax Act, 1941, and the Central Sales Tax (West Bengal) Rules, 1958.
5. Impact of the refusal of declaration forms on the rehabilitation scheme of a sick industrial unit.

Issue-wise Detailed Analysis:

1. Refusal to issue declaration forms under the Sales Tax Act due to arrear Sales Tax dues:
The petitioners, registered dealers under the 1956 Act and the 1941 Act, contended that the Sales Tax Authorities' refusal to issue declaration forms due to non-payment of arrear Sales Tax dues deprived them of concessional tax rates, contravening Section 22(1) of the 1985 Act. The Court noted that the refusal to issue forms was based on the petitioners' failure to pay arrear dues, which was a coercive measure to recover dues and not aligned with the provisions of Section 22(1).

2. Interpretation of Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985:
Section 22(1) of the 1985 Act suspends legal processes that interfere with the business operations of a sick industrial unit under rehabilitation. The Court examined whether the refusal to issue declaration forms could be considered "execution, distress, or the like" under Section 22(1). It concluded that refusal to issue forms due to arrear dues was a coercive measure similar to execution and distress, thus falling within the scope of Section 22(1).

3. Jurisdiction of the Court concerning Central Sales Tax matters:
The Court retained jurisdiction to determine questions related to Central Sales Tax, as the case did not pertain to the levy, assessment, or collection of any tax under any specified State Act. The Court noted that the procedural machinery under the 1941 Act applied to the 1956 Act by virtue of Section 9 of the 1956 Act, and references related to Central Sales Tax were to be decided by the Tribunal under the 1987 Act.

4. Applicability of the Bengal Finance Sales Tax Act, 1941, and the Central Sales Tax (West Bengal) Rules, 1958:
The 1958 Rules, enacted under the 1956 Act, incorporated provisions of the 1941 Rules mutatis mutandis. The Court highlighted that the provisions of Rule 27AA of the 1941 Rules formed part of the 1958 Rules due to this incorporation. The refusal to issue declaration forms under Rule 27AA(2)(c) was considered an action against the properties of the petitioner company, aligning with the provisions of Section 22(1) of the 1985 Act.

5. Impact of the refusal of declaration forms on the rehabilitation scheme of a sick industrial unit:
The petitioner No. 1, declared a Sick Industrial Undertaking under the 1985 Act, had a rehabilitation scheme approved by the IDBI, which included a clause for a Sales Tax Loan to meet arrear dues. The refusal to issue declaration forms hindered the petitioner's ability to avail concessional tax rates, affecting its competitive business operations. The Court determined that such refusal, due to non-payment of arrear dues, was a similar process to execution and distress, thus falling under Section 22(1) of the 1985 Act.

Conclusion:
The Court directed that the Sales Tax Authorities should not withhold declaration forms on account of non-payment of arrears of Sales Tax dues. However, the authorities were permitted to seek consent from the BIFR for withholding the forms under the 1956 Act. The writ petition was disposed of accordingly, with no order as to costs.

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