TaxTMI 
TaxTMI 
TaxTMI 
2014 (6) TMI 688
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....tutions, but failed to maintain financial discipline. The petitioner along with ICICI filed an OA before the DRT, Jaipur and in those proceedings a recovery certificate was issued for an amount of Rs. 44,78,65,444 on December 20, 2000. The said certificate was thereafter sought to be executed. It is during the pendency of the execution proceedings that the respondent, Commercial Taxes Officer, Special Circle, Udaipur filed an application dated June 1, 2004 before the recovery officer seeking right of first appropriation from the amounts released by sale of assets of the debtor towards discharge of statutory liability of Rs. 60,86,172 under the RST Act and Rs. 44,04,415 under the CST Act totalling to Rs. 1,08,73,587 and interest due thereon. Such a right of first appropriation insofar as the dues under the RST Act are concerned, was claimed on the basis of section 50 of the RST Act, which reads as under: "50. Liability under this Act to be the first charge.-Notwithstanding anything to the contrary contained in any law for the time being in force, any amount of tax and any other sum payable by a dealer or any other person under this Act, shall be the first charge on the prop....
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....under the CST Act was Rs. 40,07,415 totalling to Rs. 49,09,736. The interest due thereon under the RST Act was quantified at Rs. 15,30,062 and under the CST Act, as Rs. 53,75,563, totalling to Rs. 1,18,15,353 inclusive of interest outstanding against the company. The petitioner in the proceedings before the DRAT conceded the right of first appropriation insofar as the dues under the RST Act were concerned in view of the provisions of section 50 of the RST Act, but sought to raise the issue in view of what was claimed to be the absence of any provision for such appropriation under the CST Act. The petitioner claimed that the provisions of section 9(2) of the CST Act could not give priority to the respondent over the claim of secured creditors. This plea was, however, not accepted by the DRAT in terms of the impugned order dated November 4, 2010. It is in view of this factual matrix that the question of law as referred to aforesaid arises for consideration. The reasoning of the DRAT is predicated on a harmonious construction of the RST Act and the CST Act. The CST Act stipulates that tax is payable by a dealer under that Act as if it was a tax or interest or penalty payable under t....
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....he RST Act, which reads as under: "52 General modes of recovery.-Without prejudice to other provisions in the Act, where any tax or other sum payable by a dealer or a person under this Act is not paid in accordance with the provisions of this Act or the Rules made or notification issued thereunder, it shall be recoverable as an arrear of land revenue and the assessing authority or any other officer having jurisdiction for the time being over such dealer or person shall be empowered to recover such tax or other sum by attachment and sale of the movable or immovable property of such dealer or person and all the provisions of the Rajasthan Land Revenue Act, 1956 (Rajasthan Act No. 15 of 1956) read with the Rajasthan Land Revenue (Payments, Credits, Refunds and Recovery) Rules, 1958 shall mutatis mutandis apply." The recovery of tax can, thus, take place by attachment and sale of movable and immovable properties and the provisions of the Rajasthan Land Revenue Act, 1956 and Rajasthan Land Revenue (Payments, Credits, Refunds and Recovery) Rules, 1958 apply mutatis mutandis. The learned counsel sought to refer to section 256 of the Rajasthan Land Revenue Act, 1956 which deals with reco....
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....Constitution of India, which have been referred to by the learned counsel for the respondent. "269. Taxes levied and collected by the Union but assigned to the States.-(1) Taxes on the sale or purchase of goods and taxes on the consign0ment of goods shall be levied and collected by the Government of India but shall be assigned and shall be deemed to have been assigned to the States on or after the 1st day of April, 1996 in the manner provided in clause (2). Explanation.-For the purposes of this clause,- (a) The expression 'taxes on the sale or purchase of goods' shall mean taxes on sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce; (b)The expression 'taxes on the consignment of goods' shall mean taxes on the consignment of goods (whether the consignment is to the person making it or to any other person), where such consignment takes place in the course of inter-State trade or commerce. (2) The net proceeds in any financial year of any such tax, except in so far as those proceeds represent proceeds attributable to union territories, shall not form part of the Consolidated Fund of India,....
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....e differential or competitive sales tax which would interfere with the inter-State trade and commerce and hinder the creation of a single economic unit across the country. It is, therefore, the Parliament which has been given the powers to define inter-State sale transactions and to levy taxes on them. In this regard, entries 92A and 92B of the List I, which is the Union List, in Seventh Schedule to the Constitution of India, read as under: "92A. Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce. 92B. Taxes on the consignment of goods (whether the consignment is to the person making it or to any other person), where such consignment takes place in the course of inter-State trade or commerce." The collection made by the Central Government is to be the revenue of the States. Thus, it was contended that though the imposition of the Central sales tax on inter-State sales is within the domain of Parliament, the revenue from Central sales tax is of the State within which the tax is leviable. The CST Act was, thus, enacted by the Parliament formulating principles for determining when a sa....
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....goods during their movement from one State to another, being a sale subsequent to the first sale in respect of the same goods and being also a sale which does not fall within sub-section (2) of section 6, the tax shall be levied and collected,- (a) where such subsequent sale has been effected by a registered dealer, in the State from which the registered dealer obtained or, as the case may be, could have obtained, the form prescribed for the purposes of clause (a) of sub-section (4) of section 8 in connection with the purchase of such goods, and, (b) where such subsequent sale has been effected by an unregistered dealer, in the State from which such subsequent sale has been effected." It is in view of the aforesaid constitutional scheme read with the provisions of the CST Act that section 9(2) of the CST Act makes a deeming provision that the assessment and collection under the CST Act is to be taken as tax, interest or penalty payable under the general sales tax law of the State. For this purpose, all powers as exist under the general sales tax law of the State would be available for collection of the Central sales tax. The learned counsel proceeded thereafter to explai....
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....te for the collection of Central sales tax in the absence of clear statutory provisions in the CST Act. However, section 50 of the RST Act creating a first charge for the crown debt was not akin to a penalty or additional tax liability and the right of first charge only deals with a question of liability owed to a State to be paid in cases where there are multiple creditors. The recovery of dues by means of a first charge was thus contended to be distinct from a tax liability or penalty and was in the domain of collection and enforcement of payment of tax. Similarly, in Dena Bank v. Bhikhabhai Prabhudas Parekh & Co. case [2000] 120 STC 610 (SC); [2001] 247 ITR 165 (SC); [2000] 5 SCC 694, the Supreme Court held that where the principle of first charge has been provided in the Karnataka Land Revenue Act, 1964 and the Karnataka Sales Tax Act, 1957 provides the sales tax dues to be collected as arrears of land revenue, the principles of first charge were held to be applicable for the dues. Thus, this was so even without any explicit provision of first charge in the Karnataka Sales Tax Act, 1957. We have considered the aforesaid submissions of learned counsel for the parties on the lim....
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.... commences. This provision is followed by section 9(2) of the said Act (which is the relevant provision for consideration in the present case) providing for assessment, reassessment, collection and enforcement of payment of tax including interest or penalty payable by a dealer under the CST Act to be as if a tax, interest or penalty is payable under the general sales tax law of the State. Thus, for all ends and purposes, the mode of assessment, reassessment, collection and enforcement of payment of tax mechanism provided under the State Sales Tax Act would equally apply to the Central sales tax to be collected under the CST Act. Not only this, but also all or any of the powers as are exercisable under the general sales tax law of the State, are to be available for the recovery of the Central sales tax. On a query, we are informed that the principle of priority of crown debt is incorporated in almost all the State Sales Tax Acts. We had, in fact, put a specific query to learned counsel for the petitioner as to whether he was aware of any State Sales Tax Act where such priory provision was not incorporated, but the learned counsel was not able to give any such example of a State Act....