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2019 (7) TMI 1235 - HC - VAT and Sales TaxSick units - levy of interest for delay - Whether an application filed and registered before the BIFR would extend protection to the Unit under Section 22 (1) of the Act, 1994 - HELD THAT - Section 22(1) of the SIC Act is unambiguous. Unless the scheme would be extended to the extent of even non-payment of outstanding dues of various Revenue Departments, in this case, the Sales Tax Department, mere registration of an application of a sick unit before the BIFR cannot be said to be a ground for either exemption from such payment or will provide protection as a justification for non-payment - Another thing of significance is that the registration of the application of the Appellant has been made on 29.05.2002, whereas this liability has arisen prior to the said date and we are of the opinion that in matters of obligations created under taxing statute, no leeway as such can be permitted to shy away from compliance or else the entire fiscal management of the State and the Union will go into disarray. The defence taken by the Appellants before the learned Single Judge did not stand the judicial test, keeping in mind the precedents which have been taken note of in the order impugned of the learned Single Judge. Appeal dismissed.
Issues:
Three appeals arising from a common order dated 19.05.2017 passed by the learned Single Judge in a batch of writ applications under the Chhattisgarh Vanijyik Kar Adhiniyam, 1994. The main issue is whether an application filed and registered before the BIFR would extend protection to the Unit under Section 22 (1) of the Act, 1994. Analysis: 1. Background of the Appeals: The appeals stem from a common order by the Single Judge regarding the imposition of interest on the Appellants by the Assessing Authorities under the Chhattisgarh Vanijyik Kar Adhiniyam, 1994. The challenge was based on the delay in payment due to the industry's situation before the BIFR. 2. Interpretation of Section 22 (1) of the SIC Act: The central argument revolved around whether registration before the BIFR would provide protection under Section 22 (1) of the Act, 1994. Various court decisions, including those by the Supreme Court, were cited to determine the conditions for applicability of this section. 3. Court's Analysis of Precedents: The court extensively analyzed precedents such as Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association and Deputy Commercial Tax Officer v. Corromandal Pharmaceuticals to interpret the scope and applicability of Section 22 (1) of the SIC Act. The court emphasized that protection under this section is limited to dues included in the sanctioned scheme. 4. Judicial Findings and Dismissal of Appeals: The Single Judge concluded that the obligation to pay interest for non-compliance with tax obligations would not be covered under the BIFR Rehabilitation Scheme. The court held that the reasons for non-payment, even if genuine, did not justify exemption from interest payment. The court dismissed the appeals, stating that the Appellants' defense did not meet the judicial test based on established precedents. 5. Final Decision and Dismissal of Appeals: Ultimately, the court found no merit in the appeals and dismissed them. The court emphasized that mere registration before the BIFR does not absolve the Appellants from their tax obligations, especially when the liability predates the registration date. The court highlighted the importance of fiscal compliance and upheld the Assessing Authority's decision to impose interest on the Appellants. In summary, the judgment clarifies the limited scope of protection under Section 22 (1) of the SIC Act, emphasizing the importance of fiscal compliance and upholding tax obligations even in cases of industry distress or registration before the BIFR.
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