National Jute Manufacturers Corporation Ltd. vs Commercial Tax Officer No. IV, Vijayawada and Another

P.A. Choudary, J.—M/s. National Company Ltd. was engaged in the manufacture and sale of jute products and had its regstered office and factory at Calcutta and a sales depot at Vijayawada. That company was registered as a dealer under the Andhra Pradesh General Sales Tax Act. The management and control of the said National Company Limited was takenover by the Central Government u/s 18-AA of the Industries (Development and Regulation) Act, 1951. Subsequently by an Ordinance called "the National Company Limited (Acquisition and Transfer of Undertakings) Ordinance, 1980" which came into force on 27th April, 1980 and which was replaced by Act No. 42 of 1980, the said National Company Limited was nationalised and the undertakings of the company stood transferred to and first vested with the Central Government by virtue of section 3 of the Act. Acting u/s 5 of the above Act, the Central Government issued a notification dated 28th April, 1980 directing all the undertakings of the said company and the right, title and interests of the company in relation to its undertakings which had vested with the Central Government u/s 3 of the Act, shall, instead of continuing to vest in the Central Government, shall vest in an existing Government company with effect from 28th April, 1980. Thus the undertakings of the National Company Limited and the right, title and interest of the company in relation to its undertakings had vested with effect from 28th April, 1980 in the Jute Corporation of India Limited. u/s 6 of the above Act, the right, title and interest of the company in addition to its undertakings which had earlier been vested in the existing company were vested in a new Government company, which is the present petitioner) with effect from 11th June, 1980. Now the State sales tax authorities had assessed the National Company Limited, Calcutta, to sales tax for the period commencing from 1st April, 1980 to 26th April, 1980 for 26 days and served a demand notice to the manager of the Vijayawada branch of the petitioner demanding payment of the tax for that period. The petitioner-company protested that the assessment and collection cannot be made against the petitioner. Having failed to get any remedy from the State sales tax authorities, the petitioner filed this writ petition.

In support of his contention, Sri P. Venkatarama Reddi, the learned counsel for the petitioner, had relied upon section 7 of the above-mentioned Act No. 42 of 1980. That section says, every liability of the company in respect of any period prior to the appointed day, shall be the liability of the company and shall be enforceable against it and not against the Central Government or where the undertakings of the company vest in an existing, or a new Government company, against such Government company. Section 7 of the Act, which is part of parliamentary enactment made under entry 52, List I, debars the State Government from collecting the sales tax from the present petitioner which is a new Government company. It is not as if the Act No. 42 of 1980 had completely omitted to provide for the realisation of the amounts due from ihe National Company Limited. In Chapter VI it is envisaged that the Central Government shall appoint a Commissioner for payments and make monies available for liquidation. It is clear, therefore, that the present attempt of the State Government to realise the sales tax amount from the petitioner-company will be contrary to the mandate of Act No. 42 of 1980 to the extent that any State law which works against the competently passed enactment of the Parliament, the State law shall yield to the parliamentary enactment under articles 245 and 246 of the Constitution. The provision of section 17 of the A.P. General Sales Tax Act which is relied upon by the sales tax authorities, even if applicable, cannot override the above law made by the Parliament. But Sri Venkatarama Reddi argued that section 17 of the Act has no application because the petitioner-company cannot be called a transferee within the meaning of section 17. Two judgments - one, of the Calcutta High Court in National Jute Manufacturers Corporation Ltd. v. Commercial Tax Officer (1982) 1 CLJ 31 and the other reported in Burn Standard Company Limited Vs. The State of Tamil Nadu and Others, support the contention of the learned counsel for the petitioner. In any case, we hold in view of the language of the Central Act No. 42 of 1980 that this demand cannot be raised against the petitioner-company.

We accordingly allow this writ petition and direct the State sales tax authorities to approach the Commissioner for payments as envisaged by the provisions of Act No. 42 of 1980. No costs.

Writ petition allowed.