Pre-appointed-day sales tax liability cannot be enforced against a transferee Government company when central acquisition law provides a separate recovery mechanism

A central acquisition statute preserved pre-appointed-day sales tax liabilities against the original company and provided a separate recovery mechanism through the Commissioner for Payments. In that setting, the State sales tax provision could not be used to recover the liability from the transferee Government company, because the State law had to yield to the conflicting Parliamentary enactment operating in the same field. The sales tax demand against the transferee company was therefore not sustainable, and recovery had to proceed under the central acquisition framework.

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Issues: Whether sales tax liability for the pre-appointed-day period could be enforced against the transferee Government company instead of the original company, in view of the central acquisition legislation and the State sales tax provision.

Analysis: The undertakings of the company had first vested in the Central Government and thereafter in Government companies under the central acquisition statute. Section 7 of that enactment provided that liabilities relatable to any period prior to the appointed day remained liabilities of the company and were enforceable against it, not against the Central Government or the transferee Government company. The statute also made separate provision for realisation through the Commissioner for Payments. In that setting, the State taxing authority could not invoke the State sales tax provision to recover the amount from the transferee company, because a State law must yield where it conflicts with a competent Parliamentary enactment operating in the same field.

Conclusion: The demand against the petitioner-company was not sustainable and the sales tax authorities were required to proceed in accordance with the central acquisition statute.

Final Conclusion: The writ petition succeeded because the pre-transfer sales tax liability could not be recovered from the transferee Government company under the State law when the central statute provided a contrary enforcement mechanism.

Ratio Decidendi: Where a central acquisition statute specifically preserves pre-appointed-day liabilities against the original company and provides a separate mechanism for recovery, the State cannot enforce those liabilities against the transferee Government company by relying on a conflicting State taxing provision.

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