Sarvaraya Textiles Ltd. vs Commissioner of Commercial Taxes, Govt. of A.P. and Another

P. Venkatarama Reddi, J.—The petitioner which is said to be a sick industrial company questions the action of the respondents in seeking to recover the profession tax dues for the years 1997-98 to 1998-2000 (up to August, 2000) to the tune of Rs. 3,03,852 - by the impugned notice dated 23-10-1999 issued by the second respondent. It is the contention of the petitioner that in view of the bar u/s 22 of the Sick Industrial Companies (Special Provisions) Act, no proceedings for execution, distress or the like against any of the properties of the company, save with the consent of the Board, can be taken while an enquiry is pending u/s 16 or a Scheme u/s 17 is under preparation or consideration.

The learned Counsel for the petitioner submits that a scheme u/s 17 is under consideration. An operating agency, viz., I.D.B.I. Mumbai, has been, appointed and rehabilitation proposals have been submitted by the petitioner-company to the operating agency and in that proposal the profession tax dues are also shown. Hence it is contended that the decision of the Supreme Court in Real Value Appliances Ltd. Vs. Canara Bank and Others, fully applies to the case of the petitioner. Adverting to the decision in Deputy Commercial Tax Officer and Others Vs. Corromandal Pharmaceuticals and Others, relied upon by the learned Government Pleader, it is urged by the learned Counsel for the petitioner that even going by the ratio of that decision the petitioner comes within the protection of Section 22 of the Act. It is submitted that the. profession tax dues are anterior to the date of sanction of the scheme and while framing the scheme the B.I.F.R. will certainly take into account the profession tax dues which have already been disclosed in the statements accompanying the rehabilitation proposals. It is also submitted that the decision in D.C.T.O. v. Corromandal Pharmaceuticals (2 supra) was distinguished in Tata Davy v. State of Orissa 111 STC 462 and the distinction pointed out therein is quite relevant to the facts of the present case.

In the impugned notice dt. 23-10-1999, reference has been made to the alleged observations in para 10 of the A.P. High Court''s decision in Corromandal Pharmaceuticals v. D.C.T.O. 101 STC 97 We find that the passage quoted by the second respondent in the impugned notice is not to be found in the judgment of this Court in 101 STC 97. In fact, the decision of this Court has been reversed by the Supreme Court in D.C.T.O. v. Corromandal Pharmaceuticals (2 supra). Hence reference to the overruled decision of this Court is wholly inappropriate. Moreover, even in the decision of the Supreme Court in 105 STC 327, we do not find the passage extracted by the second respondent in his ''urgent notice''. The principles laid down by the Supreme Court either in the case of D.C.T.O. v. Corromandal Pharmaceuticals (2 supra) or Tata Davy v. State of Orissa have not been adverted to and considered by the second respondent. The approach was casual and there was total non-application of mind to the question whether Section 22 places an embargo against recovery of disputed tax dues by proceeding against the properties of the company. We therefore set aside the impugned notice and direct the second respondent or any other competent authority to consider the objections to be filed by the petitioner within three weeks from today and to pass afresh reasoned order. Till then, no steps should be taken for recovery of the profession tax dues for the relevant period. It is made clear that there is no bar to recover the tax dues by resorting to any other mode of recovery provided for by law.

The writ petition is disposed of with the above directions. No costs.