TaxTMI 
TaxTMI 
1991 (2) TMI 331
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....te as defined in clause (c) of sub-section (8), and having become due and payable within the twelve months next before that date." And sub-section (8)(c) of section 530 says : "the expression 'the relevant date' means-- (i)in the case of a company ordered to be wound up compulsorily, the date of appointment (or first appointment) of a provisional liquidator, or if no such appointment was made, the date of the winding up order, unless in either case the company had commenced to be wound up voluntarily before that date ; and (ii)in any case where sub-clause (i) does not apply, the date of the passing of the resolution for the voluntary winding up of the company." The appellant-company was ordered to be wound up by an order of court made on June 26, 1967. The liquidator, after obtaining directions of the court, invited the creditors of the company to prove their debts or claims and simultaneously to establish any title they may have to prioritiy under section 530. Pursuant to this invitation, the Sales Tax Officer, Petlad, submitted a comprehensive claim in the sum of Rs. 70,945.60 as the amount of sales tax plus penalty payable by the company and claimed priority for t....
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....he word "due" implies or conveys different meanings in juxtaposition in which it is used in the two parts of the same clause. The word "due" in the first part of the clause must mean "outstanding at the relevant date". When it occurs in the expression "having become due" in the later part of the clause, it means that the event which brought the debt into existence occurred and also it became payable, meaning thereby that its payment could have been enforced against the company within the twelve months before the relevant date, that is, the date of the order of winding up. Three specific conditions are prescribed in the clause and all the three must co-exist and be satisfied in respect of any particular debt for which priority is claimed. The three conditions are : (i)a debt of the kind mentioned in the clause must be outstanding on the relevant date ; (ii)the debt must have become due in the sense that it must have been incurred at any time within the twelve months next before the relevant date ; and (iii)the debt must have become payable at any time within the twelve months next before the relevant date. To conclude, the learned judge observed that the tax becomes due ....
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....levant date and, secondly, it must have so become presently payable within the twelve months immediately preceding the relevant date. Further, regarding sales tax, it was held that it becomes due and payable when the tax has been assessed and a notice of demand for payment of that tax is served upon the assessee or the dealer concerned and it is in this sense that the word has to be interpreted. Taking that view, the appeal of the Sales Tax Officer was allowed inasmuch as the sales tax due under the Bombay Sales Tax Act and the Central Sales Tax Act in respect of which the assessment orders were passed within the period of twelve months immediately preceding June 26, 1967, were held to have priority. The balance amount as dues was directed to rank as ordinary debts without any priority, since the relevant orders were passed after the date of the winding up order. The claim of the Sales Tax Officer to the recovery of penalty in liquidation proceedings was negatived because the demand was held to be made without application of mind as to whether there was reasonable cause for the official liquidator for not paying the amount. O. J. Appeal No. 2 of 1975 was allowed to this extent. The....
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.... which may be outstanding at that time ; the priority is in respect only of such rates as became due and payable within twelve months before, in this case, January 28, 1931."(p. 574) And further as follows : "The rate was made on April 1, 1930 ; at that time it became due and payable. The alteration that has been made subsequently in September of the year 1931 is to fit into the section to which I have referred, and by that section it is to be deemed to have had effect as from the commencement of the period in respect of which the rate was made. In those circumstances, it seems quite plain that the sum in contest in the present case must be appropriated to that period and that period alone, and, although ascertained at a later date, it nonetheless belongs to and is founded upon the liability to rates during that period and no other. I find myself, therefore, unable to give a limited meaning to the words, as Eve, J. has done. I think the words referred to in section 264 of the Companies Act, 'due and payable' meant to refer to a liability in respect of which there had to be a solution-solvendum in futuro-of that particular debt, and that particular debt is now to be deemed to ....
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....ebts of a company only if they have been assessed on the company up to a particular date, namely, 5th April or prior to the appointment of the liquidator or resolution for the winding up of the company and do not exceed in amount the whole of one year's assessment. It will be noticed that by comparison the provision of clause (a) of sub-section (1) of section 230 of the Indian Companies Act, is much wider and gives much more latitude to the income-tax authorities for, under these provisions, arrears of taxes would rank in priority if they have become due and payable within the twelve months next before the date on which they are payable irrespective of whether such taxes have been assessed on the company or not. We are aware of the large arrears of income and other taxes which are due by many companies which are in liquidation, but we would venture to think that the remedy for this unsatisfactory situation is not the conferment of preferential rights without limit to the income-tax authorities under section 230 of the Indian Companies Act, but the energetic completion of assessment proceedings and vigorous measures for the collection of the assessed taxes." In Pennington's Compa....