Form C is not an acknowledgment of subsisting liability, and winding up failed amid a settlement-based factual dispute.

Issuance of Form C under the Central Sales Tax regime did not amount to an acknowledgment of a subsisting liability under Section 18 of the Limitation Act, because it merely evidenced the sale transaction and receipt of goods at an agreed price, without admitting a present debtor-creditor relationship. The Court held that Section 18 requires acknowledgment of current liability, not proof of past dealings, so limitation was not extended. The winding up petition also failed because the petitioner had suppressed a settlement agreement under which part-payment had been made, and the remaining dispute over retained dues raised factual issues unsuitable for winding up proceedings.

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Issues: Whether issuance of Form C under the Central Sales Tax regime amounts to acknowledgment of a subsisting liability and establishes a jural relationship so as to extend limitation under Section 18 of the Limitation Act, and whether the winding up petition could succeed in view of the subsequent settlement agreement and payment.

Analysis: Form C is issued to enable the purchaser to obtain the concessional rate of sales tax and, by itself, evidences the sale transaction and the receipt of goods at an agreed price. It does not contain an express or implied admission of a present subsisting liability, nor does it show an intention to acknowledge a debtor-creditor relationship on the date of issuance. The Court accepted the view that Section 18 requires acknowledgment of a current liability, not merely proof of past transactions. The Court also noted that the petition suppressed the settlement agreement under which a sum of Rs. 29 lakhs was paid towards outstanding dues, while the balance retention of Rs. 8.5 lakhs arose under that agreement and involved factual disputes unsuitable for a winding up proceeding.

Conclusion: Issuance of Form C did not amount to acknowledgment of liability or create a jural relationship for extending limitation, and the winding up petition could not be sustained.

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