State Taxation Tribunal - West Bengal
Bengal Ferro Alloy And Steel Ltd. vs Certificate Officer And Ors. on 14 December, 2000
Equivalent citations: [2002]125STC330(TRIBUNAL)
JUDGMENT
1. This is an application under Section 8 of the West Bengal Taxation Tribunal Act, 1987 praying for an order quashing the Certificate Proceeding No. 32 ST (PS)/2000-2001 initiated by the respondent No. 1 for realisation of dues for four quarters ending on 31st March, 1988 under the Bengal Finance (Sales Tax) Act, 1941.
2. The case in brief, is that the petitioner is a company within the meaning of the Companies Act and is a manufacturer of steel ingots in the factory at Kalyani. The petitioner was a registered dealer under the Bengal Finance (Sales Tax) Act, 1941 and also under the Central Sales Tax Act. Since there was a continuous labour trouble in the company it could not run smoothly as such resulting heavy loss in the production. Ultimately, the Board of Directors of the petitioner made reference to the BIFR pointing out the relevant facts reflected in the final accounts of the company and on considering the financial position and other aspects, the BIFR declared the company a sick industrial company on February 8, 1990 within the meaning of Sick Industrial Companies Act. A rehabilitation scheme was proposed and the IRBI decided to advance term loan subject to the scheme being sanctioned for implementation by AIFR but ultimately due to financial stringency of the petitioner the rehabilitation scheme was abandoned. In view of a proceeding dated March 9, 1993 the BIFR found it just and equitable to pass an order of winding up of the company and directed for its consideration by the High Court in terms of Section 20 of the said Act. An appeal was preferred by the petitioner before the appellate authority and the appeal was dismissed on July 21, 1993. A writ petition was filed against the order of the appellate authority bearing W.P. No. 3100 of 1993 in the honourable High Court at Calcutta and the honourable Court directed the operating agency to submit viability report of the revised scheme and the operative portion of the order passed by the BIFR was stayed. A report in compliance of the honourable Court was filed to the appellate authority on April 27, 1994 by the operating agency. Subsequently, on the basis of the said report the honourable Court gave various directions on August 18, 1994. The appellate authority directed the operating agency on January 6, 1995. The petitioner again moved the honourable Court against the order of fixing the appeal on April 10, 1995. The appellate authority thereafter took up the hearing and dismissed the appeal on January 29, 1996. The appellate authority now has made a proposal for winding up the company due to non-consideration of rehabilitation scheme though writ petition is still pending before the honourable Court. In the meantime, a case No. BIFR 279 of 1998 was initiated by the honourable High Court, but it was made out of list due to pendency of the writ petition filed before the High Court against the order of BIFR. In the meantime, assessment of four quarters ending on March 31, 1988 was completed by the assessing authority and huge demand was raised by the respondent No. 1, the assessing authority, Appeal was preferred against this order and it was modified in appeal. The petitioner thereafter was directed to make payment by a letter dated September 13, 2000 issued by the respondent No. 2 and there was a threat that penal action would be taken if no payment is made. The said letter was not given effect being challenged before the Tribunal since it was not in form prescribed under a statute. Thereafter a demand notice was sent to the petitioner for realisation of the assessed dues under the Act, 1941. The petitioner being declared a sick industry by the BIFR and the rehabilitation scheme since was also under consideration by the honourable High Court prayer was made before the respondent No. 1 to drop the certificate proceeding but the respondent No. 1 refused to drop the proceeding and is bent upon taking steps for recovery of the dues under coercive measure. The certificate for realisation of the dues bearing No. 32 ST (PS)/2000-2001 illegal and bad in law should be quashed.
3. On behalf of the petitioner it is submitted that since the matter is pending before the honourable Court for consideration the proceeding for realisation of sales tax should remain suspended under the provisions of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985. On behalf of the respondents it is submitted that the proceeding if is pending for consideration by the BIFR or any enquiry under Section 16 or scheme under Section 17 of the Act is pending for consideration the provision of Section 22 only then can be attracted. Since in this case no proceeding was pending before the BIFR or any matter referred to under Sections 16 and 17 of the Act the petitioner is not entitled to get any relief as prayed for.
4. The learned Advocate for the petitioner submits that the matter since under consideration by the honourable Court and has not yet been disposed of finally the proceeding for realisation of sales tax should be stayed since the decision of the honourable Court if goes in favour of the petitioner or for taking further step by the BIFR for reconsideration of the scheme or appeal, the realisation of tax will be against the existing position of law and will act adversely to the principles of natural justice.
5. The point for consideration, therefore, is if the petitioner is entitled to get the relief such as for stay of the proceedings for realisation of sales tax. Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 provides that in case the enquiry under Section 16 is pending or any scheme referred to under Section 17 is under preparation or consideration by BIFR or any appeal under Section 25 is pending, then the proceedings relating to (a) winding up of industrial companies ; (b) execution or distress against the properties of sick industrial company, and (c) appointment of receiver automatically shall be presumed to be suspended. In the instant case, the matter in dispute, i.e., the proceeding for realisation of sales tax prima facie does not attract the provisions of Section 22(1) of the Act since neither enquiry under Section 16 nor any scheme under Section 17 nor any appeal under Section 25 is pending for consideration. Therefore, the question of automatic suspension of the proceeding for realisation of sales tax under distress by initiating the process of certificate cannot remain suspended. In a case reported in Aluminium Industries Ltd. v. Commercial Tax Officer, Tandur [1991] 72 Comp Cas 323 (AP) the fact was that the company was declared sick industry ; an operating agency was appointed and a scheme of rehabilitation was finalised for implementation. In such a case the High Court held that the proceeding by the Commercial Tax Officer was illegal for recovery of sales tax without prior consent of the Board. It may, therefore, be noted that even High Court did not interfere into the matter and left responsibility upon, the Commercial Tax Officer for seeking permission of the Board. The High Court in a case, viz., Reliance Ispat Industries Ltd. v. Commissioner of Sales Tax, M.P. reported in [1993] 91 STC 521 (MP); [1993] 77 Comp Cas 381 (MP) held that the sales tax dues would be barred by the provisions under Section 22(1) of the Act where reference had been made to the Board under Section 15(1) and operating agency had been appointed for preparing a scheme for the same. The Allahabad High Court has held in Industrial Finance Corporation of India v. Maharashtra Steels Ltd. [1990] 67 Comp Cas 412, that an aggrieved party may move the Board for its consent to appointment of a receiver where a reference had already been made to the Board registered and even a Bench nominated to make an enquiry. Thus, in all the aforesaid cases it is clear that the High Courts never adopted the measure to stop the proceedings for execution or distress against the properties of sick industrial company. The matter was left upon the Board for granting consent to the aggrieved party. In the present case, therefore, considering the aforesaid principles we are of opinion that the prayer for stay as made by the petitioner cannot be allowed, but before proceeding against the petitioner the necessary permission for execution of the certificate proceeding is to be taken from the Board if the nature of proceedings mentioned under Section 22(1) are pending according to law for final decision. In the instant case, since no such proceeding is pending as provided under Section 22(1) of the Act, the Board is not in the seisin over the matter under law. The petitioner, therefore, is not entitled to get the relief as prayed for. The application, therefore, is liable to be dismissed.
6. The application under Section 8 of the West Bengal Taxation Tribunal Act, 1987 is, thus, dismissed. No order as to costs.
7. Judgment delivered in open court and the application is dismissed as per the judgment kept in separate sheets along with the record of this case. After the delivery of this judgment, the learned advocate for the applicant prays for stay of the operation of the order. The learned State Representative opposes it. Heard both sides. We find no reason for staying the operation of this order. The prayer is, therefore, rejected.