CHAKRAVARTTI, C.J. - (1.) THIS is a reference under Chapter V, Rule 2, of the Original Side Rules of a question of law under the Bengal Finance (Sales Tax) Act, 1941, read with the Indian Companies Act. The learned referring Judge, Banerjee, J., has framed the question in the following words :- "Whether sales tax is to be treated as a preferential debt within the meaning of Section 230 of the Indian Companies Act - from which date ? From the date of demand or the date when the sale price is received, or any other date ?" The question is not very precisely worded, but its true nature, or that of so much of it as is involved in the present case, will appear from the following facts.
(2.) ON the 23rd May, 1950, certain creditor of a private limited company, called Messrs Recols (India) Ltd., applied for its liquidation and the application was admitted on the 25th May, 1950, when an order for the appointment of a provisional liquidator was also made. A winding-up order was next made on the 18th July, 1950, and Mr. S. N. Bhattacharya, a Barrister-at-Law practising in this Court, was appointed Official Liquidator. The Liquidator had the list of creditors settled and made some realisations and at that stage a certificate, demanding payment of a sum of Rs. 760-10-9 as arrears of sales tax due from the company for the four quarters ending on the 31st March, 1948, was served on him. As far as it appears from the papers before us, the Sales Tax Authorities did not previously make any attempt to prove their claim in the liquidation. The assets of the company are sufficient to pay the preferential creditor in full, including the Sales Tax Authorities, if they are allowed to rank as such, but the Official Liquidator thought that they were not entitled to any preferential payment, but only entitled to share in the distribution as unsecured creditors. Accordingly, on the 8th May, 1952, he took out a master's Summons in respect of an application to be made by him to the Court for directions in regard to the payment of the sales tax demand and other directions. The application came to be heard be Banerjee, J., who made the present reference. The facts relating to the sales tax demand did not appear fully from the papers placed before us along with the reference, but they have been stated in a further affidavit filed under our directions by the Commercial Tax Officer, who was in charge of the assessment. It is not necessary to set out all the details. For the purposes of the present case, it will be sufficient to state that the company has been a registered dealer since August, 1946, and was liable to furnish quarterly returns. It submitted returns for the four quarters in question on certain dates in 1947 and 1948 and along with those returns it submitted, as required by Section 10(3) of the Bengal Finance (Sales Tax) Act, receipts from the Reserve Bank of India for amounts of tax payable according to the returns. The total amount of tax thus paid for the four quarters, beginning on the 1st April, 1947, and ending on the 31st March, 1948, was Rs. 4,044-15-3. The Commissioner of Commercial Taxes, however, was not satisfied that the returns were correct and complete and, accordingly on the 28th August, 1948, he caused a notice of assessment to be issued to the company in Form No. VI under Sections 11(1) and 14(1) of the Act. In pursuance of that notice, an assessment was made on the 8th May, 1950, and the tax payable for the four quarters was determined at Rs. 4,804-8-0. In view of the payment of Rs. 4,044-15-3 already made, the balance due was Rs. 759-8-9 and a notice of demand for that amount in Form No. VII was served on the company on the 17th May, 1950, directing payment on or before the 30th June, 1950. No payment being made, proceedings for the recovery of the amount were commenced under the Bengal Public Demands Recovery Act, resulting in the service of a certificate on the Official Liquidator. The certificate is said to be for Rs. 760-10-9 and the small different between that amount and the unpaid balance of the assessed tax was perhaps due to the addition of the costs of the certificate.
(3.) AS already stated, the Official Liquidator contends that no preferential payment of the amount of the certificate can be claimed. Whether that view is right, depends on the true effect of Section 230(1)(a) of the Indian Companies Act on the facts of the present case. That section is expressed in the following terms :- "230. (1) In a winding up there shall be paid in priority to all other debts - (a) all revenue, taxes, cesses and rates, whether payable to the State or to local authority, due from the company at the date hereinafter mentioned and having become due and payable within the twelve months next before that date." "The date hereinafter mentioned" is, under subsection (5)(a) of the section, the date of the winding-up order in the case of a compulsory winding up of a company which had not previously commenced to be wound up voluntarily, as is the case here. ;