2013 (10) TMI 1281 - HC - VAT and Sales Tax

Court Upholds Dismissal of Appeals for Non-Compliance with Tax Payment Proof Requirement

The court upheld the dismissal of appeals by the assessee-revisionist for non-compliance with section 9(1B) of the U.P. Trade Tax Act and the Central ... Failure to comply with the provisions of section 9(1B) of the U.P. Trade Tax Act, 1948 - protection under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 - Held that:- A reading of section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 makes it clear that it bars the proceedings for winding up of the company or for realization of dues through suit, execution or by adopting coercive measure and for enforcing any security or guarantee against the company alone. In the instant case none of the procedure has been adopted for recovering any amount from the assessee/revisionist. No proceedings have been initiated for realization of the tax dues. It is only by virtue the statutory provision that the assessee/revisionist is obliged to deposit the tax dues and to furnish proof thereof so that its appeal is entertained. The deposit of the tax dues by the assessee/revisionist as such is a voluntary act for which no proceedings much less that of distress have to be adopted. - assessee/revisionist is not entitle to any protection under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 - authorities below have not committed any error in rejecting the appeals of the assessee-revisionist for non-compliance of section 9(1B) of the Act. - Decided against assessee. Issues:Dismissal of appeals for non-compliance with section 9(1B) of the U.P. Trade Tax Act and the Central Sales Tax Act due to failure to furnish proof of tax payment. Applicability of deferment provisions for sick industrial units under section 38 of the Act. Interpretation of section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 in relation to pending rehabilitation proceedings.Analysis:The judgment addresses the dismissal of appeals by the assessee-revisionist for the years 1996-97 and 1997-98 under the U.P. Trade Tax Act and the Central Sales Tax Act due to non-compliance with section 9(1B) of the Act, which mandates furnishing proof of tax payment for appeal consideration. The BIFR order declaring the assessee as a sick industry and allowing deferment of sales tax dues from 1994-95 onwards was cited as a reason for non-deposit of tax. However, the court emphasized that section 9(1B) makes proof of tax payment a mandatory precondition for appeal consideration, irrespective of the sick industry status.Regarding the deferment provisions for sick industrial units under section 38 of the Act, the judgment clarifies that deferment of tax payment can only be granted by the State Government following a specific order. In this case, as there was no such order from the State Government permitting deferment of trade tax dues to the assessee-revisionist, the mandatory requirement of depositing tax for appeal consideration remained applicable.The judgment also delves into the interpretation of section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, which prohibits winding up proceedings or coercive measures against a sick industrial company during pending rehabilitation proceedings. However, the court highlighted that section 22 does not exempt the assessee from complying with tax payment obligations for appeal consideration, as it only bars coercive recovery measures without affecting voluntary tax deposits.Ultimately, the court found no error in the authorities' decision to reject the appeals due to non-compliance with section 9(1B) of the Act. The judgment concludes by dismissing both revisions, emphasizing the mandatory nature of tax payment proof for maintaining appeals under the U.P. Trade Tax Act and the Central Sales Tax Act.