Special acquisition statute controls recovery of pre-transfer sales tax liabilities; direct enforcement and pre-deposit condition were unsustainable.

A special acquisition statute transferred the undertaking to a Government company while creating a separate mechanism for pre-appointed-day liabilities. Prior-period sales tax could not be recovered by direct coercive action against the Government company; the claim had to be pursued before the Commissioner of Payments under the statute's overriding scheme for discharge of dues. The demand for pre-deposit as a condition for hearing the assessee's appeal was also unsustainable, because the appeal concerned the tax quantum and not the distinct question of liability under the acquisition regime. The recovery of pre-transfer tax liabilities therefore had to follow the special statutory mechanism.

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Issues: (i) Whether sales tax liabilities relating to periods prior to the appointed day in respect of the undertaking could be enforced directly against the Government company or had to be pursued before the Commissioner of Payments under the special acquisition statute. (ii) Whether the statutory authorities could insist on pre-deposit of the disputed tax amount as a condition for hearing the assessee's appeal.

Issue (i): Whether sales tax liabilities relating to periods prior to the appointed day in respect of the undertaking could be enforced directly against the Government company or had to be pursued before the Commissioner of Payments under the special acquisition statute.

Analysis: The acquisition statute transferred the undertaking to the Central Government and thereafter to the Government company, while separately dealing with pre-appointed-day liabilities. Section 6 placed liabilities of the Amritsar Sugar Mills Company for prior periods on the company itself, save for specified liabilities, and section 16 provided a special priority scheme for payment of taxes and other dues through the Commissioner of Payments out of the amount fixed under section 7. Section 21 gave the Act overriding effect over inconsistent provisions of other laws and orders. On this scheme, the statutory mode for recovery of the pre-appointed-day sales tax was not direct coercive recovery from the Government company, but presentation of the claim before the Commissioner of Payments.

Conclusion: The liability for the prior-period sales tax was not recoverable directly from the Government company and had to be pursued in accordance with the special mechanism under the acquisition Act.

Issue (ii): Whether the statutory authorities could insist on pre-deposit of the disputed tax amount as a condition for hearing the assessee's appeal.

Analysis: The statutory remedy under the Punjab General Sales Tax Act concerned the quantum of tax and did not decide the distinct question of liability of the Government company to pay the amount after the undertaking had vested under the special acquisition statute. In that setting, insistence on pre-deposit for hearing the appeal was unjustified.

Conclusion: The condition requiring prior deposit was not sustainable.

Final Conclusion: The State's appeals failed, while the writ relief was granted to the limited extent that the matter had to be heard without insisting on pre-deposit, leaving the assessee substantially protected under the special acquisition regime.

Ratio Decidendi: Where a special acquisition statute creates a complete scheme for transfer of an undertaking and distribution of pre-transfer liabilities, including payment through a Commissioner of Payments with overriding effect, recovery must follow that special mechanism and not ordinary coercive enforcement.

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