Premier Cable Company Ltd. (the Company) registered under the Companies Act, 1956 (the Companies Act) was wound up by an order passed by the Hon’ble High Court and an Official Liquidator (the OL) attached to the High Court was appointed to take charge of the assets and liabilities of the Company and to deal with the same in terms of the Companies Act and the Rules framed thereunder. Thus, the OL issued a notice inviting tenders, in respect of the sale of assets of the Company in liquidation with the conditions that the sale would be subject to confirmation by the Hon’ble High Court and the sale price would be inclusive of all statutory levies such as Sales tax etc., as may be applicable.
The offer of the Hindustan Urban Infrastructure Ltd. (HUIL or the auction purchaser) was accepted and duly confirmed by the High Court. Thereafter, HUIL being desirous to transport the purchased assets across the border of multiple States, requested the OL to incorporate the relevant Sales tax registration numbers in the sale invoices, to which the OL declined to accede.
Subsequently, the OL filed an affidavit before the Ld. Single Judge of the Hon’ble High Court, inter alia, stating that the OL would neither be collecting nor be paying any Cess or Sales tax in respect of the sales so effected. Further, the OL, inter alia, also seek clarification on whether the auction purchaser would be liable to pay tax on the purchase of goods, pursuant to the auction conducted and further to direct the auction purchaser to pay any tax as may be leviable by the Sales Tax Department.
The Ld. Single Judge of the Hon’ble High Court held that the sale in question cannot be treated as a sale and would not be exigible to Sales tax. Being aggrieved, the Department preferred an appeal before Ld. Division Bench of the Hon’ble High Court wherein also the Order of the Ld. Single Judge was upheld after observing that the OL would not fall within the definition of ‘dealer’ under Section 2(viii) of the Kerala General Sales Tax Act, 1963 (“the Sales Tax Act”).
Thereafter, the Department filed a Review Petition before the Hon’ble High Court wherein it was held that the OL cannot be treated as a ‘dealer’ under the Sales Tax Act and therefore not liable to pay Sales tax. It was further held that the auction purchaser is liable to pay Purchase tax under Section 5A of the Sales Tax Act.
Being aggrieved, the Department preferred an appeal before the Hon’ble Supreme Court for determining as to whether the OL would be liable to pay Sales tax in the aforesaid sale transaction. The Hon’ble Supreme Court after detailed analyses and review of various judgments held as under:
Therefore, the Hon’ble Supreme Court allowed the appeal in favour of the Department and held that the OL is a dealer liable to pay Sales tax.