Sales Tax Due Date: assessed tax becomes payable only on service of the assessment notice, determining liquidation priority.

Clarifies when a sales-tax liability becomes a concrete debt for liquidation priority: liability accruing on turnover is not a payable debt until assessment and service of a prescribed notice of demand; amounts discharged by payment with returns leave no surviving debt. Accordingly, assessed balances become enforceable and `due and payable` on the date the assessment notice is served, making such assessed balances preferential debts for liquidation priority where that service falls within the statutory priority period.

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Issues: Whether the assessed balance of sales tax claimed by the Commercial Tax Authorities is a preferential debt within the meaning of Section 230(1)(a) of the Indian Companies Act, and if so from which date it became due and payable for the purpose of claiming priority in the liquidation.

Analysis: The Court confined the inquiry to the assessed balance (Rs. 759-8-9) and examined when a sales tax debt is "due" and when it is "payable" under the Bengal Finance (Sales Tax) Act, 1941. The Act distinguishes (i) liability accruing on taxable turnover and (ii) the mode and timing of payment: Section 10(3) contemplates payment on account with returns and Section 11 provides for assessment where returns are absent or incorrect. The Court held that merely because tax liability accrues on taxable turnover does not make an unascertained or unquantified liability a concrete debt for priority purposes. For amounts paid with returns there is no surviving debt. For assessed balances the tax becomes a concrete, enforceable debt only when an assessment is made and a notice of demand in the prescribed form is served. The Court applied the principle, analogous to assessed income-tax, that assessed tax becomes due when the demand is made, and rejected the contention that tax generally becomes payable merely upon the date when returns fall due.

Conclusion: The balance of sales tax of Rs. 759-8-9 became due and payable on 17th May, 1950 when the notice of demand (Form VII) was served, which was within twelve months of the winding-up order of 18th July, 1950; accordingly that amount is a preferential debt under Section 230(1)(a) of the Indian Companies Act in favour of the Revenue.

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