THE OFFICIAL LIQUIDATOR, PALGHAT METAL INDUSTRIES COMPANY LTD. Vs. THE ASST. COMMISSIONER, SPECIAL CIRCLE, PALGHAT

JUDGEMENT

(1.) THE Palghat Metal Industries Company Ltd .,was ordered to be wound up by an order of this Court dated 4 -7 -1966.The company was assessed to sales -tax by the Sales Tax Officer,Special Circle,Palghat,for the assessment years 1962 -63,1963 -64 and 1964 -65,on the basis of best judgment assessment as per his order dated 25 -12 -1965.The company preferred appeals before the Appellate Assistant Commissioner of Agricultural Income Tax and Sales Tax,Palghat,on 5 -8 -1966.The appeals were decided on favour of the company by order dated 7 -8 -1969 by the Appellate Assistant Commissioner.He set aside the original order and remanded the case to the Sales Tax Officer for fresh disposal.

(2.) THEREAFTER fresh returns were filed for the aforesaid years by the official liquidator.The assessment was completed by the Assistant Commissioner(Assessment)Special Circle,Palghat,as per his order dated 31 -7 -1974.As per this order,the company had to pay an amount of Rs.9,681.98 towards sales tax.The details of the tax for each of the year are given by the official liquidator in his affidavit.The difference between the original assessment and the final assessment is Rs.12,704.15.The Tahsildar realised an amount of Rs.18,811.74 by revenue recovery proceedings and the balance was paid in cash.The Tahsildar,Palghat,sold the properties on 18 -4 -1966 and the sale was confirmed on 23 -6 -1966.The amount was actually realised by the sales tax authority only on 3 -7 -1966.The application by the official liquidator is for refund of the entire amount Rs.22,386.13 realised from the company by the Sales Tax Officer.

(3.) THE question for determination in this application is whether the official liquidator entitled to the refund of the entire amount or whether the revenue is entitled to preferential treatment regarding the amounts due to it.According to section 528 of the Companies Act,all debts contingent or ascertained due from the company will have to be proved when the company is ordered to be wound up.This is a company ordered to be wound up on 4 -7 -1966.That the Central Government or the State Government as the case may be,are entitlied to preference regarding payments cannot be disputed since section 530 of the Companies Act provides for it.But this preference is subject to the fact that the claim of the Government should be before the date mentioned in section 530.For a better appreciation of this contention,I shall read section 530: "S.530.Preferential Payments: -(1)In a winding up,there shall be paid in priority to all other debts, - (a)all revenues,taxes,cases and rates due from the company to the Central or a State Government or to a local authority at the relevant date as defined in clause(c)of sub -section(8 ),and having become due and payable within the twelve months before that date; xx xx xx (8)For the purpose of this section. - (a)x x x x (b)x x x x (c)the expression "the relevant date "means. - (i)in the case of a company ordered to be wound up compulsorily,the date of the appointment(or first appointment)of a provisional liquidator,or if no such appointment was made the date of the winding up order,unless in either case the company had commenced to be wound up voluntarily before that date;and xx xx xx (ii)x x x x Since the final order of assessment in this case is only on 31 -7 -1975,that is,long after the winding up the company,the remedy available to the revenue,being an unsecured creditor,is to prove the debt and receive payment in the course of the winding up.