Company inability to pay: tax arrears can justify a statutory winding-up notice, subject to prior commissioner approval. A company defaulting on tax dues may be deemed unable to pay if, after service of a statutory demand under section 434(1)(a) of the Companies Act, it ... Summary
Company inability to pay: tax arrears can justify a statutory winding-up notice, subject to prior commissioner approval.
A company defaulting on tax dues may be deemed unable to pay if, after service of a statutory demand under section 434(1)(a) of the Companies Act, it fails within three weeks to pay, secure, or compound the debt; the department may then move for winding up. Liquidation is to be used only after exhausting all other recovery methods and in cases of continuing default. An Income-tax Officer must obtain prior approval of the Commissioner or Additional Commissioner before issuing such a notice.
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