TMI Blog1995 (11) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... e was modified by the BIFR as indicated in its letter dated December 28, 1993, by granting certain additional reliefs. It was also stated in the said letter that the company was expected to make its net worth positive in the year 1995-96 and wipe out the accumulated losses in the year 1997-98. It is the case of the petitioner that there were delays in the implementation of the rehabilitation scheme and that certain modifications to the sanctioned scheme are at present under processing and consideration of the operating agency, i.e., IRBI, and the BIFR. Thus, it cannot be disputed that the sanctioned scheme for the rehabilitation of the petitioner is under implementation. The petitioner defaulted in the payment of sales tax assessed under the Andhra Pradesh General Sales Tax Act, 1957 ("the APGST Act", for short) for the assessment years 1992-93 and 1993-94 and the sales tax authorities have initiated action under section 17 of the APGST Act for the recovery of the said dues. It is stated on behalf of the petitioner that it preferred appeals to the fourth respondent in respect of the said assessments and also sought stay of collection of tax pending the said appeals and that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Supreme Court in Gram Panchayat v. Shree Vallabh Glass Works Ltd. [1992] 86 STC 41; AIR 1990 SC 1017 and of a Division Bench of this Court in Alluminium Industries Ltd. v. Commercial Tax Officer, Tandur (1990) 11 APSTJ 265 and of a learned single Judge of the Calcutta High Court in Himalaya Rubber Products Limited v. Board for Industrial and Financial Reconstruction [1993] 88 STC 47. The learned Government Pleader contends that as the alternative remedy was already availed by the petitioner, the present writ petition should not be admitted. But the question raised is whether proceedings for recovery of the sales tax dues can lie during the period the sanctioned scheme is under implementation. As that depends only on the scope and operation of sub-section (1) of section 22 of the Act, the writ petition itself is being disposed of finally as we are satisfied, on the facts of the present case, that absent the consent of the BIFR, section 22 of the Act interdicts all proceedings for recovery of tax dues by the State. The learned Government Pleader submits that the second respondent herein in fact issued garnishee notice dated October 26, 1994, under section 17 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er submits that the sanctioned scheme does not provide for any sales tax concessions from the State Government and no consent for any such concession was sought from the State Government before the sanction for the scheme in question was obtained from the BIFR and that therefore the petitioner is bound to pay the sales tax under the APGST Act which had become exigible after the sanctioned scheme was brought under implementation and that section 22 should be read as not attracted to the proceedings for recovery of such sales tax if it has fallen in arrears. We do not see any reason or logic for reading down section 22 in the manner advocated by the learned Government Pleader. The heading of section 22 is "suspension of legal proceedings, contracts, etc.". Sub-section (1) of section 22 of the Act, which is relevant, is as follows: "22(1).?Where, in respect of an industrial company, an inquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under section 25 relating to an industrial company is pending, then notwithstanding anything contained in the Compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defaults are committed by the sick industrial company in violation of what is provided in such a scheme, in our view, then also sub-section (1) of section 22 of the Act is attracted and the State Government cannot initiate proceedings for execution, distress or the like against any other properties of the industrial company for the recovery of such arrears without the consent of the BIFR. This is because section 19 and section 22 of the Act operate in different fields. Whereas under section 19 of the Act the scheme may provide for total exemption from tax or for deferment of the payment of tax, section 22(1) prohibits coercive proceedings for collection of tax during the pendency of an enquiry under section 16 of the Act or during the preparation or consideration of any scheme referred to under section 17 of the Act or during the period the sanctioned scheme is under implementation or during the pendency of an appeal under section 25 of the Act relating to an industrial company. As aptly stated by a Division Bench of the Madhya Pradesh High Court in Reliance Ispat Industries Ltd. v. Commissioner of Sales Tax [1993] 91 STC 521 "sub-section (1) of section 22 of the Act does not prohi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able sick industrial companies are both inadequate and time-consuming. A multiplicity of laws and agencies makes the adoption of co-ordinated approach for dealing with sick industrial companies difficult. A need has, therefore, been felt to enact in public interest a legislation to provide for timely determination by a body of experts of the preventive, ameliorative, remedial and other measures that would need to be adopted with respect to such companies and for enforcement of the measures considered appropriate with utmost practicable despatch." It is, therefore, obvious that the emphasis is also on speedy implementation of the remedial measures. Once the scheme is framed and approved, the BIFR is kept in overall control of the implementation of the scheme and, therefore, is given the discretion for according approval for initiating or continuing proceedings for recovery of dues or arrears from the company during the period of implementation of the scheme, so that the revival and rehabilitation of the sick company may not be hampered or adversely affected. There can be no doubt that action under section 17 of the Andhra Pradesh General Sales Tax Act is attracted by sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that case, which arose on a writ petition filed by it questioning the proceedings to recover the Central sales tax dues in view of section 22 of the Act contending that no such recoveries could be made except with the previous consent of the BIFR. This Court issued a writ of mandamus directing the commercial tax authorities "not to resort to coercive steps for recovery of the amounts of disputed Central sales tax due for the relevant period........without permission of the BIFR". However, our attention is drawn to another decision of a Division Bench of this Court in Andhra Cement Company Ltd. v. Government of A.P. [1993] 89 STC 124; (1991) 13 APSTJ 288, wherein it has been observed that the Act does not permit the company to withhold payment of taxes on sales subsequent to the proceedings under the Act which observation occurs in the following passage: "Reliance was sought to be placed on section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985. We fail to see how it assists the company in this case for the period in question to which the impugned demand relates. The said Act does not permit the company to withhold payment of taxes on sales subsequent t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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