Recovery of sales tax and recovery of dues to Public Works Department not permissible without consent of BIFR

6:58 PM
.V.V. Paper Industries Ltd. vs. Commercial Tax Officer [(2008) 145 Comp. Cas 815 (Mad])

The Petitioner Company became side and a reference was filed before the Board for Industrial & Financial Reconstruction (BIFR) u/s. 15(1) of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) for declaring the company a sick company and also for effecting rehabilitation. The Board by an order dated 9-5-2001, declared the Petitioner company a sick company.

In respect of sales tax dues to the extent of Rs.5,05,30,050/ -, the Commercial tax Officer issued a distraint order exercising the powers u/s. 8 of the Tamil Nadu Revenue Recovery Act, 1864. The Executive Engineers, Public Works Department, had also issued an order dated 20-5-2004, directing the Petitioner company to pay Rs.49,34,032/ - being the amount for having drawn water from Amarawathi river.

The question that arose for consideration in the writ petition filed by the Petitioner seeking to quash the orders of the Respondent was whether the Respondent could recover the amount due from the assets of the company without obtaining necessary permission from the BIFR wherein the matter was pending.

His Lordship of the Madras High Court, allowing the petitions, that the Respondents could not proceed with either distress action initiated by the Commercial Tax Department or for recovery of amount by the Public Works Department unless consent was obtained from the Board. It was open to the Respondents in these cases to take necessary steps to implead themselves before the Board and seek permission for the purpose of recovery of the amount from the assets of the Petitioner Company.

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