NIKET UDYOG LTD Vs. COMMERCIAL TAX OFFICER

JUDGEMENT

(1.) PETITIONER is declared to be a sick industrial company under Section 31 of SICA [sick Industrial Companies (Special Provisions) Act, 1985] (hereinafter referred to as 'the Act') on 9-5-2000. Respondent Nos. 1 to 3 have initiated the proceedings for recovery of sales tax in spite of the directions issued by the State Government as per order P. 3 dated 22-11-2001. The recovery has been initiated as per orders P. 5, P. 6, P. 7, P. 8 and P. 10 which are assailed by the petitioner in this writ petition.

(2.) PETITIONER is a public limited company registered under the Companies Act, 1956. Petitioner became sick industrial company and was so declared by Board for Industrial and Financial Reconstruction (BIFR) as per order P. 1 dated 9-5-2000. Petitioner submitted rehabilitation package along with various relief and concessions proposed is under examination of the operating agency appointed by BIFR as well as the Government of M. P. , the Department of Commerce and Industries. The fact of petitioner becoming a sick industrial company was brought to the notice of the Commercial Tax Officer vide reply dated 22-10-2001. Petitioner submits that State Government, Department of Commerce and Industries issued memo No. F-15-21/99/iir. 3 dated 22-11-2001 addressed to the Principal Secretary, Government of M. P. , Commercial Tax Department to direct Commercial Tax Officer not to take recovery proceedings against the petitioner in view of the declaration of the company as sick by BIFR. Respondent No. 1 acting in the capacity of Tehsildar served demand notice on 14-12-2001 for payment of State and Central Tax. Petitioner submitted written reply P. 4 and letter P. 3 and requested not to proceed with the recovery distress or like action. Undeterred, respondent No. 1 in the capacity of respondent No. 2 attached the movable property gas cylinders on 2-3-2002 and 4-3-2002 as per P. 5. Attachment and restraint order P. 6 was also passed in respect of land, building, factory and machinery on 8-3-2002. Sale proclamation for safe of gas cylinders was issued on 8-3-2002 fixing the date of sale on 8-4-2002. Respondent also attached bank accounts vide order P. 8 No. 1212 dated 16-10-2001 and 1304 dated 25-10-2001. Petitioner objected to the coercive recovery by filing reply P. 9. Registration certificate of the petitioner has been cancelled as per order P. 10 dated 5-3-2002. Petitioner submits that action is illegal, arbitrary and in contravention of the directions issued by the BIFR as per P. 1 and P. 5 which has statutory force issued under Section 32 (10) (a) of the M. P. Commercial Tax Act, 1994. The action of attachment of the Bank account, cancellation of certification without consent of the BIFR and denial of the declaration form is arbitrary, illegal and bad in law. The action is illegal, arbitrary and has been passed in ignorance of the legal position under Section 22 (1) of the Act. Petitioner has been prohibited from doing the business. Thus purpose of rehabilitation being made by the operating agency as reflected in the communication P. 3 of the State Government.

(3.) IN the return the respondents contend that Section 22 of the Act lays down that during the pendency of the application for declaring an industry to be sick industry and during the pendency of the preparation of the rehabilitation package no steps for distress sale or recovery of due be taken up against the concerned industry. In the instant case the provision of Section 22 of the Act is not applicable as rehabilitation package for petitioner industry is under preparation and as per the orders of the Board for Industrial and Financial Reconstruction dated 9-5-2000 the cut off date for crystallisation of the dues for the purpose of which rehabilitation package has to be prepared is 30-9-2000, therefore, all subsequent dues whatsoever after the said date 30-9-2000 are not the subject-matter of the proceedings under the Act. The present recovery towards the liability for payment of sales tax which has arisen after 30-9-2000 is not barred by provisions of the Act and can be legitimately recovered. The recovery towards sales tax is permissible in view of the Apex Court decision rendered in the case of Dy. CTO v. Corromandal Pharmaceuticals [1997] 14scc 154, Kanoria Dyechem Ltd. v. STO [2002] 125 STC 210 (Guj.) and Circular Rule 2 issued by Commercial Tax Commissioner, M. P.