Sick company moratorium does not compel issuance of tax acknowledgment without remittance; mandamus for Form 40 was rejected.

Form 40 under the Karnataka entry tax regime is only an acknowledgment issued after a manufacturer remits tax collected from dealers, and it does not create an independent statutory right to obtain a receipt before payment. The Court's reasoning was that the manufacturer's collection and onward remittance of the tax reflects a voluntary assumption of the dealer's liability, so refusal to issue Form 40 until remittance is made is not coercive recovery of a pre-cut-off debt. Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 therefore did not bar the State from insisting on actual payment before issuing the form, and the writ of mandamus was not maintainable.

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Issues: Whether a writ of mandamus could be issued directing the State to furnish form 40 to a manufacturer that had collected entry tax from dealers but had not remitted the amount to the Government, on the plea that proceedings before the Board for Industrial and Financial Reconstruction attracted the moratorium under section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985.

Analysis: Form 40 under the Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1979 is only an enabling mechanism by which a manufacturer, having collected entry tax from dealers, remits that amount to the Government and receives acknowledgment of such remittance. The manufacturer's act in collecting and passing on the tax is treated as a voluntary assumption of the dealer's liability, not as an independent statutory liability of the sick industrial company. The Court held that non-issue of form 40 until payment is made cannot be equated with coercive action for recovery of a pre-cut-off liability. Since no statutory right existed to demand issuance of a receipt in advance of remittance, section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 did not bar the State from insisting on payment before issuing the form.

Conclusion: The requested mandamus was not maintainable, and the claim to obtain form 40 without remitting the collected tax was rejected.

Final Conclusion: The writ petition failed because the moratorium under the sick-industry legislation did not extend to a demand for issuance of a tax-remittance acknowledgment without actual payment.

Ratio Decidendi: A moratorium under section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 does not compel the State to issue a receipt or acknowledgment for tax collected from dealers unless the amount has actually been remitted; refusal to issue such acknowledgment is not coercive recovery.

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