The refusal of the sales tax authorities to issue declaration forms to the petitioner was a similar process such as execution and distress under section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985.

Headnote:
SALES TAX - CENTRAL SALES TAX ACT, 1956 - WEST BENGAL TAXATION TRIBUNAL ACT, 1987 - BENGAL FINANCE (SALES TAX) ACT, 1941 - SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985 - Refusal of sales tax authorities to issue declaration forms - Whether such refusal can be considered to be within the phrase execution, "distress and the like" under section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985.
Fact of the Case:

The petitioner, a registered dealer under the Central Sales Tax Act, 1956 (1956 Act) and the Bengal Finance (Sales Tax) Act, 1941 (1941 Act), challenged the refusal of the sales tax authorities to issue declaration forms under either Act. The refusal was based on the petitioner's failure to pay arrear sales tax dues. The petitioner contended that such refusal violated section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (1985 Act), which provided protection against certain legal proceedings for sick industrial companies.
Finding of the Court:

The court held that the refusal of the sales tax authorities to issue declaration forms to the petitioner was a coercive measure to recover dues from the applicant resorted to by the sales tax authorities summarily. The sales tax declaration forms have become a necessary adjunct of trade without which a trader cannot carry on competitive business. The withholding of declaration forms under rule 27AA(2)(c) is an alternative to the normal mode of recovery of sales tax dues. In the circumstances it would appear that for the purposes of section 22(1) of the 1985 Act, withholding of the sales tax declaration forms on account of non-payment of arrears of sales tax dues is a similar process such as execution and distress. It follows that the sales tax authorities cannot in such circumstances withhold such forms except with the consent of the BIFR.
Issues: Whether the refusal of the sales tax authorities to issue declaration forms to the petitioner was a similar process such as execution and distress under section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985.
Ratio Decidendi: The court interpreted the phrase "the like" in section 22(1) of the 1985 Act to include similar processes to execution and distress, such as the withholding of sales tax declaration forms. The court reasoned that the object of the refusal to give sales tax declaration forms to the petitioner was to put pressure on the petitioner to clear its arrear dues, and that this was a coercive measure to recover dues from the applicant resorted to by the sales tax authorities summarily. The court also noted that the withholding of declaration forms was an alternative to the normal mode of recovery of sales tax dues, which would be covered under section 22(1).
Final Decision: The court directed that the sales tax authorities would not withhold the declaration forms on account of non-payment of arrears of sales tax dues. The sales tax authorities would, however, be at liberty to make an application to the BIFR for its consent to the withholding of sales tax declaration forms under the 1956 Act.

JUDGMENT

SMT. RUMA PAL, J. - The petitioner No. 1 is a registered dealer under the Central Sales Tax Act, 1956 (hereinafter referred to as "the 1956 Act") and under the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as "the 1941 Act").

The grievance of the petitioners is that the sales tax authorities are refusing to issue declaration forms either under the 1956 Act or under the 1941 Act. It is stated that the ground for such refusal is the petitioners' failure to pay the arrear of sales tax dues. The petitioner No. 1 is, it is contended, being deprived thereby of the concessional rates of tax available to registered dealers in contravention of section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985.

The petitioner No. 1 is admittedly liable to pay sales tax both under the 1956 Act and under the 1941 Act. In this case we are only concerned with the refusal of the sales tax authority to give declaration forms under rule 4 of the Central Sales Tax (West Bengal) Rules, 1958, to the petitioner No. 1. Inasmuch as the questions to be decided in this matter ultimately involve only a question of interpretation of statutory provisions the matter is being disposed of without affidavits.

My attention was drawn to the decision of this Court in the unreported judgment (Since reported in [1991] 82 STC 157 (Cal).) of Commissioner of Commercial Taxes v. Hindustan Petroleum Corporation Ltd. In that case the court refused to entertain a reference application even though the question sought to be referred pertained to the Central Sales Tax Act, 1956, on the ground that the procedural machinery under the 1941 Act had been made applicable to the 1956 Act by virtue of section 9 of the 1956 Act. It was held that by virtue of the provisions of the West Bengal Taxation Tribunal Act, 1987 (hereinafter referred to as "the 1987 Act") references in matters relating to the Central Sales Tax Act, 1956, were to be decided by the Tribunal set up under the 1987 Act. The decision in my mind turned upon the language of section 9 of the 1956 Act, and is an authority for the proposition that in connection with matters relating to Central sales tax the procedure applicable under the 1941 Act including references must be followed.

The decision of this Court referred to in the preceding paragraph of this judgment is in apparent conflict with the decision of the Taxation Tribunal itself in the case of Overseas Packaging Industries (P.) Ltd. v. West Bengal Commercial Taxes Tribunal reported in [1990] 78 STC 267.

It is not necessary for me to resolve this dispute. The issue decided by this Court in the unreported decision (Since reported in [1991] 82 STC 157 (Cal).) referred to above does not arise for determination here. The question in this case is whether the sales tax authorities can refuse to issue sales tax declaration forms under the 1956 Act having regard to the provisions of section 22(1) of the 1985 Act.

Section 8(1) and (4) of the 1956 Act provide :

"(1) Every dealer, who in the course of inter-State trade or commerce -

(a) sells to the Government any goods; or

(b) sells to a registered dealer other than the Government goods of the description referred to in sub-section (3);

shall be liable to pay tax under this Act, which shall be 4 per cent of his turnover.

(4) The provisions of sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner -

(a) A declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtaining from the prescribed authority;"

Sub-sections (3), (4) and (5) of section 13 of the 1956 Act empowers the State Government to make rules to carry out the purposes of the 1956 Act.

In exercise of the powers conferred by the said sub-sections of section 13 of the 1956 Act, the State Government enacted

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Judicial Analysis

1991 Supreme(Cal) 94

Ruma Pal, J.HIMALAYA RUBBER PRODUCTS LIMITED AND ANOTHERVersusTHE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION AND OTHERS.Matter No. 1852 of 1991,Decided On :20-02-1991

The refusal of the sales tax authorities to issue declaration forms to the petitioner was a similar process such as execution and distress under section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985.

Judicial Analysis

Ruma Pal, J.
HIMALAYA RUBBER PRODUCTS LIMITED AND ANOTHER
Versus
THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION AND OTHERS.
Matter No. 1852 of 1991,
Decided On :20-02-1991