Case Law Details
Lakshana Cotton Spinning Mills Limited Vs Commercial Tax Officer (Madras High Court)
Madras High Court held that recovery action against the Directors of the company under the provisions of the Tamil Nadu General Sales Tax Act, 1959, Central Sales Tax Act, 1956 and Revenue Recovery Act not justified since company is non-existent.
Facts- Lakshana Cotton Spinning Mills Ltd. has gone into Liquidation and official liquidator has been appointed. The company stood dissolved by order dated 20.12.2017. The respondents has filed a reply to the status report, where they take cognizance of the status of the assessee. In conclusion and succumbing to the status of the assessee which, as on date, is non-existent, they seek liberty to proceed with recovery action against the Directors of the company, if any, under the provisions of the Tamil Nadu General Sales Tax Act, 1959, Central Sales Tax Act, 1956 and Revenue Recovery Act.
Conclusion- Held that we are of the considered view that such specific liberty as sought for is not liable to be granted. We may, at best, grant liberty to the Department to take recourse to such action as may be provided in accordance with law and in line with the applicable statutory provisions.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
We have heard Mr.N.Prasad, learned counsel for Lakshana Cotton Spinning Mills Ltd., petitioner/assessee. Originally, the petitioner in these Writ Petitions was wound up by an order of this Court in C.P.No.299 of 1999 on 27.7.2000 and an Official Liquidator had been appointed as the Liquidator of the Company.
2. An appeal was filed in C.A.Nos.2400 to 2402 of 2000 and the order of winding up had been initially stayed for a period of two weeks, extended thereafter till disposal of the Company Appeals. The order of winding up had been set aside on 26.02.2001 and thereafter on 04.11.2009 in C.P.No.299 of 1999 an Official Liquidator was appointed as Liquidator with a direction to take charge of all assets and effects of the company.
3. We have heard Ms.Ambili, Deputy Official Liquidator. Status report dated 08.10.2024 has been filed that reveals that there were only movable assets taken over by the Official Liquidator. Those assets were sold to settle the dues of the Provident Fund and Employees State Insurance authorities. Thus, the assessee stood dissolved by order dated 20.12.2017 in C.A.No.1218 of 2013.
4. The Supreme Court in a recent decision in Principal Commissioner of Income-Tax V. Mahagun Realtors (P) Ltd. (443 ITR 194), in the context of the Income Tax Act, 1961 has reiterated the settled difference between amalgamation and winding up of a company.
5. While in the case of amalgamation, it is only the apparent and outer shell of the company which is destroyed, the core or the corporate venture continues in the hands of the transferee by whom it has been taken over. However, in line with the judgment in the case of Saraswati Industrial Syndicate Ltd. V. CIT (186 ITR 278) and other judgments, they state that in the case of dissolution, the entity wholly ceases to exist.
6. Ms. Amirta Dinakaran, learned counsel appearing for the respondents has filed a reply to the status report, where they take cognizance of the status of the assessee. In conclusion and succumbing to the status of the assessee which, as on date, is non-existent, they seek liberty to proceed with recovery action against the Directors of the company, if any, under the provisions of the Tamil Nadu General Sales Tax Act, 1959, Central Sales Tax Act, 1956 and Revenue Recovery Act.
7. We are of the considered view that such specific liberty as sought for is not liable to be granted. We may, at best, grant liberty to the Department to take recourse to such action as may be provided in accordance with law and in line with the applicable statutory provisions.
8. Recording the aforesaid position, all Writ Petitions and the connected Miscellaneous Petitions are closed. No costs.
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