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Issues Involved:
1. Priority of sales tax claims under Section 530(1)(a) of the Companies Act, 1956. 2. Validity of assessment orders made without notice to the official liquidator. Detailed Analysis: Issue 1: Priority of Sales Tax Claims under Section 530(1)(a) of the Companies Act, 1956 The Sales Tax Officer, Kanpur, filed a claim for Rs. 22,468.88 against M/s. Northern India Oil Industries, which was under liquidation. The official liquidator accepted the claim for the first six items but refused to give them priority under Section 530(1) of the Companies Act. The last two items were rejected entirely because the assessment orders were made without notice to the official liquidator and the demand notices were not served on him. The appellant contended that the sales tax should be given priority under Section 530(1)(a) of the Companies Act. This section states that in a winding-up, all revenues, taxes, cesses, and rates due from the company to the Central or State Government or a local authority, which became due and payable within the twelve months before the winding-up order, shall be paid in priority to all other debts. The court held that the sales tax for the assessment years 1954-55 to 1958-59 could not be considered as due and payable within the twelve months preceding the winding-up order dated 7th August 1963. The court emphasized that both conditions-becoming due and becoming payable-must coexist within the relevant period for the priority to be claimed. Therefore, the court rejected the appellant's contention that the sales tax was entitled to priority. The appellant's argument that the sales tax should be treated as land revenue and thus entitled to priority was also rejected. The court clarified that the terms "recoverable" and "payable" have different meanings. The word "revenues" in Section 530(1)(a) refers to revenues due and payable as revenues, not those recoverable as arrears of land revenue. Issue 2: Validity of Assessment Orders Made Without Notice to the Official Liquidator The appellant also challenged the official liquidator's rejection of the sales tax claims for the assessment year 1959-60 under the U.P. Sales Tax Act and the Central Sales Tax Act. These assessment orders were passed ex parte on 28th March 1964 and 10th August 1964, respectively, without notice to the official liquidator and without serving demand notices on him. The official liquidator rejected these claims on the grounds that the Sales Tax Officer did not seek the court's leave to commence the assessment proceedings and that the assessment orders were made behind his back. The court found these grounds unjustified. Section 17 of the Sales Tax Act stipulates that the legality and correctness of an assessment order can only be challenged as provided in that Act. Since the official liquidator did not take steps to challenge the assessment orders under the Act, the court held that the orders remained final and binding. The court noted that the official liquidator could have filed appeals against the assessment orders and sought condonation of delay under Section 9(6) of the Sales Tax Act, which extends the benefit of Section 5 of the Indian Limitation Act to such appeals. The court concluded that the appellant's claim under the assessment orders dated 28th March 1964 and 10th August 1964 for the assessment year 1959-60 was wrongly rejected by the official liquidator, although these taxes were not entitled to priority as they were neither due nor payable within the twelve months preceding the winding-up order. Conclusion The court allowed the appeal in part, setting aside the official liquidator's decision concerning the sales taxes under the assessment orders dated 28th March 1964 and 10th August 1964 for the assessment year 1959-60. The official liquidator was directed to entertain the appellant's claim and consider it in accordance with the law. The appeal regarding priority was dismissed. The court also provided the official liquidator with the right to approach the sales tax authority for a fresh consideration of the assessments if advised. A copy of the judgment was ordered to be supplied to the official liquidator free of charge.
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