2016 (10) TMI 638 - HC - VAT and Sales Tax

Court directs respondent to hold sales tax arrears notice, petitioner to prove BIFR proceedings. Failure risks Writ Petition dismissal.

M/s Metal Box India Ltd. Versus The Assistant Commissioner of Commercial Taxes, The Commercial Tax Officer

The Court directed the respondent to hold the notice demanding arrears of sales tax in abeyance for six weeks. The petitioner was instructed to provide ... Demand of arrears of sales tax - TNGST Act, 1959 - CST Act, 1956 - sick industrial company - protection u/s 22(1) of the SICA - principles of natural justice - Held that: - the Special Tribunal took into consideration of the submissions of the petitioner and shifted the burden on the petitioner to produce proof to the Department that proceedings are pending before BIFR and also to show the proof as to whether any Scheme has been framed and if the petitioner was not successful in doing so, liberty was granted to the Department to Act in accordance with law. It is not known as to the outcome of the direction issued by the Special Tribunal and as to whether any orders were passed subsequently or whether the order of the Tribunal was challenged. The petitioner has a duty to bring it to the notice of the AO about the pendency of any proceedings before the BIFR. Therefore, at this juncture, the impugned notice cannot be quashed. However, with a view to afford an opportunity to the petitioner, the respondent is directed to keep the notice impugned in this Writ Petition in abeyance for a period of six weeks - petition disposed off. Issues:Quashing of order for arrears of sales tax, Sick Industrial Undertaking status, Violation of natural justice.Analysis:The petitioner filed a Writ Petition seeking to quash an order from the first respondent demanding arrears of sales tax for various assessment years under the TNGST Act and CST Act. The petitioner claimed to be a Sick Industrial Undertaking pending before the BIFR and entitled to protection under SICA. However, the Government Advocate argued that the petitioner failed to provide proof of pending proceedings before the BIFR, rendering their plea insufficient. The Court agreed with the Government Advocate, emphasizing that the petitioner should have informed the Assessing Officer if they were a Sick Industrial Company before raising the issue in a Writ Petition.Regarding a previous case where arrears recovery actions were taken, the Tribunal directed the petitioner to provide proof of proceedings before BIFR or any framed scheme, allowing recovery only with BIFR consent. The Court noted that the outcome of this direction was unknown. Despite this, the Court held that the petitioner had a duty to inform the Assessing Officer about proceedings before the BIFR. Consequently, the impugned notice was not quashed immediately, but the respondent was directed to hold it in abeyance for six weeks. Within this period, the petitioner must produce proof of proceedings before the BIFR; failure to do so would result in automatic dismissal of the Writ Petition, allowing the respondents to proceed in accordance with the law.In conclusion, the Writ Petition was disposed of with no costs, and the connected Miscellaneous Petition was closed. The judgment highlighted the importance of providing necessary documentation regarding the status of being a Sick Industrial Company before seeking relief through a Writ Petition, emphasizing the duty of the petitioner to inform the Assessing Officer about pending proceedings before the BIFR.