The Hindu Business Line : `Clearance of ST dues only after BIFR's decision on extension of deferral scheme'

THE Madurai Bench of the Madras High Court has quashed an order of the Assistant Commissioner of Commercial Taxes, Dindigul, under Section 8 of the Revenue Recovery Act claiming a sum of Rs 2,21,52,052 as sales tax arrears from a paper mill in Mettupalayam.

The money was covered under the rehabilitation scheme proposed by the Board for Industrial & Financial Reconstruction (BIFR) for the sick unit, which was under consideration, and hence the sales tax dues could not be claimed now, the Bench held.

Mr Justice S. Rajeswaran, before whom the petitioner argued the case, directed the first respondent (Assistant Commissioner of Commercial Taxes, Dindigul), to approach the BIFR wherein the petitioner's request for extension of the deferral scheme for payment of tax for a further period was pending, and make a claim for the tax thereafter.

In the meantime, the interest of justice required that the impugned order dated March 23, 2004 of the first respondent be quashed, the Judge ordered.

The petitioner, Heritage Paper Mills Ltd, a sick unit, submitted that they had filed a petition on March 5, 2001 before BIFR. The draft of their rehabilitation scheme was under the Board's consideration.

Earlier, the company was permitted to avail themselves of interest-free sales tax (IFST) under the deferral scheme for a period of nine years from July 1, 1993 to June 30, 2002, as per the department's memo dated June 3, 1994 with a ceiling limit of Rs 1.89 crore.

Now, the company had sought BIFR's sanction for extension of the IFST for a further period, which was under consideration of the Board.

The counsel for the petitioner, Mr M. Aravind Subramaniam, contended that when the petitioner's request for deferral of sales tax for a further period was pending before the BIFR, it was not proper on the part of the respondent to issue any recovery notice.

However, the Government Pleader submitted that the amount demanded from the petitioner was to be collected and could not be deferred at all.

The Judge, while quashing the impugned order, said that if the 25 per cent amount paid by the petitioner as a condition imposed by this Court was available with the respondent, the same might be kept with the department till a final decision was taken as to the liability of the petitioner.

Till such time, the amount demanded from the petitioner might have to be kept in abeyance.