STATE BANK OF INDIA Vs. STATE OF BIHAR

JUDGEMENT

(1.) This writ application has been filed for quashing the letter contained in memo No. 88 dated 23.3.95 issued by the Respondent No. 2 directing the Petitioner to deposit in the Govt. Treasury all amounts and whatever money the Bank may advance to the Steel Authority or whatever amount they receive from the Steel Authority to the Deputy Commissioner, Commercial Taxes, Bokaro Steel City for liquidation of the liability of Respondent No. 3, Steel Authority of India.

(2.) The fact in short for the purpose of this application is that the State Bank of India who also got a Branch at Bokaro Steel City, Bokaro granted cash credit facility to the Respondent No. 3, Steel Authority of India at Bokaro and first of all Respondent No. 2, Deputy Commissioner, Commercial Taxes, served a notice on the Bank under Section 27(1) of the Bihar Finance Act, 1981 informing the Petitioner Bank that Steel Authority of India owes Rs. 4,82,916.67 p. by way of Bihar Sales Tax and more than a crore as Central Sales Tax to the State Govt. and inspite of demand notice that had not been paid so the order was served under Section 27(4) of the Bihar Finance Act, 1981 (to be called hereinafter only 'the Act') for deduction of the due amount in deposit with the Bank and to be credited in the State Treasury for liquidation towards tax dues. Bank questioned the order of the Deputy Commissioner, Commercial Taxes, vide Annexure-3 i.e. dated 9.6.94 and matter was kept for hearing and for that Bank also filed a criminal writ petition bearing Cr.WJC No. 309/94 (R) for quashing the notice but when the matter was taken up for hearing Bank had to withdraw this writ application in view of the submission that Respondent No. 2 has no intention to file criminal case as against the Bank. Sub-sequently the Respondent No. 2 gave up threatening to prosecute the Bank but is sued notice for the reason that the Respondent No. 3 as against the assess-ment of the Sales Tax preferred revision before the Sales Tax Tribunal which was dismissed and the Respondent No. 3 i.e. Steel Authority of India was required to pay Bihar Sales Tax and Central Sales Tax to the extent of Rs. 37,06,564.04 p. and Rs. 91,90,76,860.67 p. respectively. Respondent No. 2 vide letter dated 20.2.95 addressed to Respondent No. 3 to clear the outstanding taxes and a copy of the same was also served to the Petitioner Bank.

(3.) It is also the case of the Petitioner that though the Petitioner has informed the Respondent No. 2 that actually the Respondent No. 2 has got no Current Account or Savings Account in the Bank and only a cash credit Account is there to facilitate the working of the Bokaro Steel Plant and they only maintained the loan account at Bokaro Branch and cash credit account at New Delhi and as such Petitioner-Bank is not entitled to realise the amount and deposit the tax amount in the treasury. But inspite of that Respondent No. 2 served a notice bearing No. 88 dated 23.3.95 alleged to have issued under Section 27(1) of the Act and called upon the Bank to pay them even the money that they advance to the Steel Authority or Bokaro Steel Plant as loan and should be deposited in the treasury for liquidation of the arrears of the taxes because that will be the first charge and to be realised as a land revenue. The notice dated 23.3.95 is apparently illegal and virtually an infringement of the fundamental rights of the Petitioner who carries the banking business and for the reason mentioned above and also for the reason that Steel Authority of India had got no Current Account or any other Account or amount deposited under the Branch of the Bank they are not in a position to deduct the money for payment of arrears of the taxes. Hence this application for quashing the order dated 23-3-95 i.e. Annexure-9 issued by the Respondent No. 2.