JUDGMENT

The judgment of the Court was delivered by

MADAN MOHAN PUNCHHI, J. - What is the ambit of the State's claim to priority in relation to revenues, taxes cesses and rates, due from a company in liquidation is the question which stands posed in this appeal by certificate, granted by the High Court of Gujarat, on O.J. Appeal No. 2 of 1975. The question arises on the frame of section 530(1)(a) of the Companies Act, 1956, as it stood at the relevant time, which is set out below :

"In a winding-up, there shall be paid in priority to all other debts - all revenues, taxes, cesses and rates due from the company to the Central or a State Government or to a local authority at the relevant date 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 priority 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 the whole amount. The liquidator rejected the claim for priority in its entirety, but admitted claim to the tune of Rs. 42,143.83 payable as debt pari passu with other unsecured creditors of the company.

The Sales Tax Officer took the matter in appeal before the Company Judge under rule 164 of the Companies (Court) Rules, 1959, which was heard by D. A. Desai, J. (as he was in the Gujarat High Court). It was urged on behalf of the Sales Tax Officer that out of the admitted claim in the amount of Rs. 42,143.83, the liquidator was in error in not granting priority in payment of debt of Rs. 22,280.96 consisting of Rs. 11,064.46 being sales tax payable by the company for the period from April 1, 1957 to December 31, 1965, under the Bombay Sales Tax Act and balance of Rs. 11,216.50 being the amount of sales tax payable under the Central Sales Tax Act, 1956, for the period from July 1, 1957, to December, 31, 1965, because the assessment order was made in respect of the aforementioned claim within a period of 12 months next before the relevant date and the notice of demand which made the tax payable was also issued within a period of 12 months next before the relevant date. It was urged that apart from any other consideration the petitioner is entitled to a priority in payment for the amount of Rs. 22,280.96 as the claim was of sales tax which was due on the relevant date and which became due and payable within 12 months next before the relevant date. It was conceded that the balance of the admitted claim in the amount of Rs. 19,862.87 being the amount of sales tax due and payable under the Bombay Sales Tax Act for the period from January 1, 1966, to June 26, 1967, would not be entitled to priority in payment. It was also conceded that the claim for an amount of Rs. 195.42 had been rightly rejected. It would appear that from the claim admitted as payable by the liquidator to the extent of Rs. 42,143.83 priority in payment was claimed for the amount of Rs. 22,280.96 on the submission that the claim represented the claim for tax payable to the State Government as it was due on the relevant date a