Priority for sales tax in winding up depends on the statutory look-back period, while final assessments must be challenged through tax remedies.

Sales tax arrears rank in winding up under section 530(1)(a) only if they are due and payable within the statutory twelve-month look-back period; older arrears do not gain priority merely because they are recoverable as land revenue. An assessment final under the Sales Tax Act cannot be ignored in a liquidation claim unless it is set aside through the Act's appellate or revisional remedies, so the official liquidator could not reject the 1959-60 assessment-based claim solely because notice had not been served, though the claim carried no priority over other debts.

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Issues: (i) Whether arrears of sales tax were entitled to priority in winding up under section 530(1)(a) of the Companies Act, 1956, including whether they could be treated as land revenue; (ii) Whether the official liquidator was entitled to reject the sales tax claim relating to the 1959-60 assessment orders passed without notice to him.

Issue (i): Whether arrears of sales tax were entitled to priority in winding up under section 530(1)(a) of the Companies Act, 1956, including whether they could be treated as land revenue.

Analysis: Priority under section 530(1)(a) attaches only to taxes that are both due and payable within the twelve months immediately preceding the relevant date. Arrears relating to earlier assessment years do not satisfy that requirement merely because they are recoverable as arrears of land revenue. The words "recoverable" and "payable" are distinct, and recoverability as land revenue does not convert old tax arrears into priority debts.

Conclusion: The claim for priority failed and was against the assessee-revenue authority.

Issue (ii): Whether the official liquidator was entitled to reject the sales tax claim relating to the 1959-60 assessment orders passed without notice to him.

Analysis: An assessment made under the Sales Tax Act can be challenged only through the statutory remedies provided by that Act. If the official liquidator had no earlier notice, he could still have pursued appeal or revision with a request for condonation of delay and, if necessary, reference to the High Court. Until set aside or modified in accordance with the Act, the assessment orders remained final and binding for the purpose of the claim.

Conclusion: The rejection of the claim on the ground that the assessments were made behind the liquidator's back was unsustainable, and the claim for those items was required to be entertained according to law, though without priority.

Final Conclusion: The appeal succeeded only to the extent that the sales tax claim based on the 1959-60 assessment orders had to be reconsidered in accordance with law, while the demand for priority over other debts was disallowed.

Ratio Decidendi: For priority in winding up, a tax debt must be both due and payable within the statutory look-back period, and an assessment final under the governing tax statute cannot be ignored unless it is set aside through the statutory appellate or revisional machinery.

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