Case Law Details
Wave Industries Pvt. Ltd. Vs State of U.P. (Supreme Court of India)
Conclusion: The Hon’ble Supreme Court held that in the event of Slum Sale, the appellant would not be liable for any tax obligations before the date on which Agreement was executed as the appellant was neither a dealer nor a manufacturer before the date of execution of Agreement. The liability would be borne out by the seller only as they had collected all the dues from their customer on behalf of the State Government and they are under an obligation to deposit the collected sum in the government treasury.
Facts: In present facts of the case, the appellants were the writ petitioners before the High Court who were unsuccessful in their challenge to the order dated 7.6.2016 whereby the liability for payment of Rs.2,14,169/- duty, Rs. 2,41,169/-penalty, and Rs.1,40,459/- interest, amounting to Rs. 5,68,797/- is declared to be borne by Purchase and not by the Seller. This appeal relates to the Amroha sugar mill which was one of the four loss making sugar mills owned and operated by the UPSSCL. For the unit at Amroha, a Slump Sale Agreement dated 17.7.2010 was entered into, followed by the sale deed dated 4.10.2010, between the UPSSCL and the appellant.
The sale agreement was registered on 9.8.2010 and possession of the Amroha unit was taken over by the appellant on 17.8.2010 and since then the appellant has been managing the unit. Subsequent to the Slump Sale Agreement, formal sale deed was executed on 4.10.2010 and in Clause 9 thereof it was made clear that the seller shall be liable to bear all assessments, rents, rates, taxes, outgoing and impositions of whatsoever nature relating to the Unit upto the signing date and thereafter these will be the liability of the purchaser. The dispute here relates to liability of unpaid duty, penalty, and interest. When recovery proceeding relating to the period prior to 17.7.2010 was initiated by the respective departments, the appellant filed a writ petition before the Lucknow Bench of the High Court of Allahabad and the said Writ Petition No.2587(M/B) of 2013 was disposed of by the High Court on 22.3.2013, with a direction to the State Government to afford hearing to the purchasers and decide their representation, with a speaking order. The appellants representation was disposed of on 7.6.2016 by declaring that the purchaser is liable for the outstanding liabilities in respect of the sugar unit at Amroha upto 30.11.2011. The payable duty with penalty and interest was quantified at Rs.5,68,797/- and the issue to be decided in this appeal is whether those outstanding liabilities are to be discharged by the seller or the purchaser.
The Hon’ble Supreme Court observed that the questions to be answered were (1) whether the dues arising out of the operations and activities of the sugar unit prior to the date of acquisition is to be borne by the seller and whether subsisting dues arising out of transactions occurring on dates prior to the sale, can be characterized as contingent or conditional liability or is it an accrued liability which may be computed or discharged at a subsequent date; (2) Whether a purchaser of a sugar mill could be treated as a dealer or service provider as an entity liable for discharging dues even if they had not been acting as a dealer or service provider or otherwise as an entity on whom, liability could be fastened.
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