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TMI Blog1981 (2) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... , a winding-up petition, being C.P. No. 50 of 1970, Bank of Madura v. Byford Ltd., has been filed in this court which is still pending in this court. During the pendency of the winding-up proceedings the petitioner has filed an application being C.A. No. 126/80, being an application under s. 391 of the Companies Act. By the said application, C.A. No. 126/80, it is proposed that there should be scheme of arrangement between the company and its creditors. The salient features of the said scheme is that all the secured as well as the unsecured creditors will be paid in toto over the next ten years. It is, however, proposed in the scheme that no penalty or interest should be levied or imposed under the various enactments including the Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question of levying any penalty in order to punish the petitioner for filing the application under s. 391 is wholly incorrect. It is also contended that the court has no jurisdiction to stay the imposition of the interest and, furthermore, on the facts and circumstances of the case, and looking to the past conduct of the petitioner, who is a habitual defaulter, the stay should not be granted. The first question which arises for consideration is as to whether this court has jurisdiction to stay the assessment proceedings and proceedings for the levy of penalty and interest. The contention of Mr. Chawla is that the Sales Tax Act is a self-contained code. It is contended that the word it proceedings " which is referred in sub-s. (6) of s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of the I.T. Act. Mr. Chawla then relied upon the Supreme Court decision in the case of S. V. Kondaskar v. V. M. Deshpande, ITO [1972] 83 ITR 685; 42 Comp Cas 168. The question which arose in that case was as to whether the ITO was obliged to take the permission of the winding-up court before initiating proceedings for issue of notices under s. 148 of the I.T. Act, 1961. The contention on behalf of the appellant therein was that by virtue of the provisions of s. 446(1) such proceedings could not be initiated without the prior approval of the court. Dealing with this contention the Supreme Court held that it was not necessary for the ITO to take the prior approval of the court under s. 446 of the Act. In this connection, the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the aforesaid passage of, the Supreme Court judgment shows that their Lordships had held that the provisions of s. 446(1) and (2) are of same sense. It cannot be helped but noticed that the expression " legal proceeding " does not occur in sub-s. (2) of s. 446 but it occurs only in sub-s. (1). The Supreme Court held that the expression " legal proceedings " stated to be occurring in sub-s. (2) means the same thing as the expression " other legal proceeding " in sub-s. (1). In sub-s. (6) of s. 391, however, the expression " legal proceeding " does not occur. The said sub-section reads as follows: " 391. (6) The court may, at any time after an application has been made to it under this section, stay the commencement or continuation of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on behalf of the respondents is that there is a time limit within which the assessment proceedings have to be completed. It is further contended that notice for the imposition of penalty has to be issued under Form ST.13 which is the same form in which notice for assessment is also issued under, s. 23. The perusal of the Act, however, shows that penalty is dealt with and levied under the provisions of ss. 55,56 and 57 of the Act. The penalty is not levied under s. 23 of the Act. To my mind there is a limitation for the passing of the assessment order under s. 23 of the Act but there is no limitation for the imposition of penalty under ss. 55, 56 and 57 of the Act. The proceedings for penalty under these provisions can be taken and complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided by s. 27(3), second proviso, that the stay of the recovery of tax does not mean that the assessee would not be liable to pay interest on the amount of tax due. The levy of interest is automatic. In fact, no order is contemplated to be passed under s. 26. The interest is calculated in accordance with the statutory provisions. The court can, however, stay the recovery of the interest. For the reasons that I have stated for the penalty, I would, therefore, be inclined to stay the recovery of the interest which may be payable by the petitioner. During the course of hearing, the counsel for the petitioner stated that a proposal has been proposed by the company to the sales tax department. Under the said proposal, the petitioner intends to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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