Triveni Structurals Ltd. vs Commissioner of Trade Tax, U.P., Lucknow

Pankaj Mithal, J.—Heard Sri N.C. Gupta, learned counsel for the assessee-revisionist and Sri U.K. Pandey, learned standing counsel for the Department. In respect to the assessment for the years 1996-97 and 1997-98 under the U.P. Trade Tax Act and the Central Sales Tax Act, respectively, the assessee-revisionist preferred appeals u/s 9 of the U.P. Trade Tax Act, 1948 (for short, "the Act") but the appeals were not entertained and were dismissed as the assessee-revisionist failed to comply with the provisions of section 9(1B) of the Act. The second appeals filed before the Tribunal were also dismissed. The orders dismissing the appeals have been impugned in these two revisions.

The contention of the learned counsel for the assessee-revisionist is that in view of the order of the BIFR declaring the assessee-revisionist to be a sick industry and providing for deferment of the sales tax dues of the year 1994-95 and thereafter and permitting its payment in five equal annual instalments commencing from 1999-2000, the appeals of the assessee-revisionist could not have been dismissed for non-deposit of tax due under the Act.

Section 9(1B) of the Act clearly provides that no appeal against the assessment order shall be entertained unless the appellant furnishes satisfactory proof of the payment of the tax due under the Act.

Section 9(1B) of the Act is quoted below:

(1B) No appeal against an assessment order under this Act shall be entertained unless the appellant has furnished satisfactory proof of the payment of the amount of tax or fee due under this Act on the turnover of sales or purchases, as the case may be, admitted by the appellant in the returns filed by him or at any stage in any proceedings under this Act, whichever is greater.

In view of the above provision, furnishing of proof of deposit of the tax is a mandatory pre-condition for maintaining an appeal against the assessment order. The appeal cannot be entertained unless proof of payment of tax is furnished. Thus, failure to comply with the said mandatory condition would entail rejection of the memo of appeal.

Section 38 of the Act makes special provision regarding sick industrial units and provides that the State Government may allow the deferment of payment of any existing or future dues under the Act in respect of a unit which has been declared sick under the Act and is approved for rehabilitation by an agency appointed by the Central Government or the State Government.

A plain reading of section 38 of the Act contemplates an order by the State Government allowing deferment of payment of existing or future dues by a sick industrial unit. It is only on the order of the State Government allowing such deferment that the benefit of section 38 would be extended to a sick industry.

The requirement of depositing the tax which is a condition precedent for entertaining appeal u/s 9(1B) of the Act cannot be dispensed with on the unit being declared sick and fit for rehabilitation by the BIFR or for any order of deferment passed by the BIFR unless there is an order to that effect by the State Government.

There is no order of the State Government permitting any deferment in the payment of trade tax dues to the assessee-revisionist pursuant to its declaration as a sick industrial unit by the BIFR.

Sri Gupta in the end placed reliance upon section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 to contend that as the pendency of the proceedings for rehabilitation of the company are pending before the BIFR the assessee/revisionist cannot be compelled to pay the sales tax dues and in turn the appeals could not have been dismissed for non-deposit of the same.

The submission is without substance. Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 only provides that where in connection with an industrial company any proceedings referred to u/s 16 or 17 of the Act or an appeal thereto is pending, notwithstanding any other law, no proceedings for the winding up of the company or for execution, distress or the like nature against any of the properties of the industrial company or for the appointment of a receiver or any suit for recovery of money or for enforcement of any security or guarantee of any loan or advance shall lie and be proceeded further.

A reading of section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 makes it clear that it bars the proceedings for winding up of the company or for realization of dues through suit, execution or by adopting coercive measure and for enforcing any security or guarantee against the company alone. In the instant case none of the aforesaid procedure has been adopted for recovering any amount from the assessee/revisionist. No proceedings have been initiated for realization of the tax dues. It is only by virtue the statutory provision that the assessee/revisionist is obliged to deposit the tax dues and to furnish proof thereof so that its appeal is entertained. The deposit of the tax dues by the assessee/revisionist as such is a voluntary act for which no proceedings much less that of distress have to be adopted.

In view of the above, the assessee/revisionist is not entitle to any protection u/s 22 of the Sick Industrial Companies (Special Provisions) Act, 1985.

In view of the above, I find that the authorities below have not committed any error in rejecting the appeals of the assessee-revisionist for non-compliance of section 9(1B) of the Act. Accordingly, both the revisions are dismissed.