J.N. Takru, J.
1. The Sales Tax Officer, Kanpur, has filed this application under Rule 164 of the Companies (Court) Rules, 1959, appealing against the decision of the official liquidator refusing his claim.
2. It is not disputed that on the application of the Registrar of Companies, U.P., dated the 24th of May, 1962, an order for the winding-up of M/s. Northern India Oil Industries was made by this court on the 7th August, 1963. The appellant filed a claim for Rs. 22,468.88 against the said company before the official liquidator on account of the arrears of sales tax (both Central and State) due from the former as per the following details:--
Date of assessment orderAssessment YearsTotal amount of tax assessedTax paidAmount of tax in arrearsRemarks123456
21.11.19551954-5514,062.506,813.087,249.42U.P.S.T. Act31. 8.19571955-561,208.33997.02211.31Do.20. 5.19581956-57324.78324.730.05Do.9. 1.19601957-5885.2278.726.50Do.26. 9.19601958-592,291.002048.21242.79Do.26. 9.19601958-59668.81-668.81Central28. 3.19641959-607,020.00-7,020.00U.P.S.T. Act10. 8.19641959-607,070.00-7,070.00Central.
3. In support of the aforesaid claim, the Assistant Sales Tax Officer of Kanpur Circle appeared before the official liquidator, and filed the relevant orders of the Sales Tax Officer along with copies of the assessment orders and copies of the acknowledgments in token of the receipt of the assessment orders and demand notices by the company. The official liquidator accepted the claim in respect of the first six items, but rejected to give them priority under Section 530(1) of the Companies Act. He also rejected the claim for the last two items on the ground that the assessment orders on which they were based were made without any notice to him and the demand notices in respect of them were not served on him. Feeling aggrieved, the Sales Tax Officer has preferred the aforesaid appeal.
4. On behalf of the appellant, his learned counsel Sri T.N. Sapru challenged the correctness of the findings of the official liquidator on both the points. So far as the question of priority was concerned, his contention was of a twofold nature. His first contention was that, on a correct interpretation of Section 530(1)(a) of the Companies Act, the sales tax in question was entitled to priority. His second contention was that, in any case, as the said sales tax had been ordered to be recovered as arrears of land revenue within the twelve months next preceding the date of the winding-up order, it was entitled to priority as land revenue. As for the claim for the last two items which was totally disallowed by the official liquidator, his contention was that as under Section 17 of the Sales Tax Act, the legality and correctness of an assessment order could not be challenged in any other manner except that provided in that Act and as the official liquidator had not got the assessment order in question set aside under the Act he was in error in rejecting the appellant's claim in respect of those items.
5. After hearing Sri Sapru and the official liquidator, I am satisfied that while the second contention of Sri Sapru is well founded, his first contention has no merit and is liable to be rejected. I shall, therefore, proceed to deal with those contentions in the order stated above.
6. Section 530(1)(a) of the Companies Act, 1956, which deals with priorities in a winding-up lays down :
' In a winding up, there shall be paid in priority to all other debts- (a) all revenues, taxes, cesses and rates due from the company to the Central or a State Government or to a local authority at the relevantdate as denned in clause (c) of Sub-section (8), and having become due andpayable within the twelve months next before that daie.'
7. Clause (c) of Sub-section (8) states :
' (c) the expression 'the relevant date' means--(i) in the case of a company ordered to be wound up compulsorily, the date of the appointment (or first appointment) of a provisional liquidator, or if no such appointment was made, the date of the winding-up order, unless in either case the company had commenced to be wound up voluntarily before that date;'.
8. As stated earlier, it is not disputed that the relevant date in this case is the 7th of August, 1963. We have, therefore, to see whether the sales tax claimed under the assessment orders for the assessment years 1954-55 to 1958-59 can be held to have become due and payable within the twelve months next before the 7th August, 1963, that is, to say between the 7th August, 1962, and the 7th of August, 1963.
9. So far as the question of the sales tax having become due and payable within the period commencing the 7th August, 1962, and ending the 7th August, 1963, is concerned, it is obvious that since the said sales tax was payable for the assessment years 1954-55 to 1958-59, it could neither have become due nor payable within the period aforementioned. It seems to me that what Section 530(1)(a) envisages is, the revenue, sales tax, etc., which are currently due and payable at the time of the winding-up order and it does not include in its ambit arrears of the same. Besides, this section not only requires that the tax, etc., should have become due within the relevant period but that they should have also become payable within that period. Both these conditions must therefore co-exist before the priority mentioned therein can be claimed. Hence even if the sales tax regarded as land revenue is held to be payable within the material period, it cannot possibly be held to have become due within that period. The view taken by me is supported by the decisions in Recols India Ltd., In re,  23 Comp. Cas. 300 ;  4 S.T.C. 271, and the Income-tax Officer, Company Circle, Bangalore v. Official Liquidator, Mysore High Court,  37 Comp. Cas. 114;  63 I.T.R. 810. Thus the first part of the first contention of Sri Sapru has no force and is rejected.
10. The second part of the first contention of Sri Sapru, viz., whether the sales tax in question is entitled to priority as land revenue, may now be considered. This contention is undoubtedly attractive, but is not correct for the simple reason that under Section 8(8) of the Sales Tax Act the arrears of sales tax become recoverable as arrears of land revenue. The words 'recoverable' and 'payable' have got completely different connotations. The word ' revenues ' used in Section 530(1)(a) of the Companies Act means revenues which have become due and payable as revenues within the twelve months next before the date of winding up, and not revenues which are recoverable as arrears of land revenue. I am therefore, not satisfied that Sri Sapru's contention that as the said sales tax was ordered to be realised as arrears of land revenue during the twelve months next before date of the winding-up order, it should be treated as revenue which has become due and payable within that period, so as to be entitled to priority under that section. The second part of the first contention of Sri Sapru has also, therefore, to be rejected.
11. The second contention of Sri Sapru has been noticed earlier, and as such need not be repeated here. It is common ground that the assessment orders relating to the assessment year 1959-60 under the U. P. Sales Tax Act and the Central Act, were passed ex parte on the 28th of March, 1964 and the 10th of May, 1964, respectively, without notice to the official liquidator, and without their demand notices being served upon him. The official liquidator rejected the claim for these two items on the grounds (1) that as the Sales Tax Officer did not take the leave of the court to the commencing of these assessment proceedings against the company, the said proceedings were void ab initio and as such no sales tax could be recovered from the company and (2) that, in any case, as the said assessment orders were made behind his (the O.L.'s) back, they were not binding upon him. As stated earlier both these grounds for the rejection of the sales tax claim are not justified. Section 17 of the Sales Tax Act on which Sri Sapru relied lays down that:
' Save as is provided in Section 11 no assessment made and no order passed under this Act or the rules made thereunder by the assessing authority shall be called into question in any court, and save as is provided in Sections 9 and 10 no appeal or application for revision or review shall lie against any such assessment or order.'
12. This section, is also applicable to the assessments made under the Central Sales Tax Act under Rule 9 of the U. P. Central Sales Tax Rules, 1957.
13. This section, to my mind, clearly lays down that an assessment made under the U. P. Sales Tax Act can be called into question only in the manner laid down in that Act and in no other. It is true that if, as in the present case, the official liquidator had no notice of the assessment proceedings, or of the assessment orders and the demand notices passed therein, he could not resort to the machinery provided under that Act till he got notice of the same, and it is also true that by the time he came to know about them the period for filing an appeal had expired, but the same cannot be said for the period after he got notice of the said assessment, i.e., when the appellant filed the sales tax claim before him; thereafter there was no justification for his not taking any steps to challenge the legality, propriety and correctness of these assessment orders as provided under the Sales Tax Act. It was not as if the Sales Tax Act did not provide for such a contingency, for Section 9 of that Act, which provides for appeals against assessments, makes a special provision in Sub-section (6) thereof, extending the benefit of Section 5 of the Indian Limitation Act to such appeals. The official liquidator could have therefore filed his appeals against the impugned assessment orders and prayed for the condonation of the delay on the grounds mentioned above. If the appellate or/and the revisional authorities under the Sales Tax Act had refused to grant him the desired relief he could have asked for a reference to this court under Section 11(1) or Section 11(4) of that Act. It cannot, therefore, be seriously urged that the Sales Tax Act does not provide for an effective machinery for challenging an assessment order passed in the circumstances stated above. I am therefore satisfied that, so long as the assessment orders in question were not got set aside or modified under the provisions of the Sales Tax Act, they were final and the official liquidator was in error in rejecting them on the grounds on which he has purported to have done.
14. On behalf of the official liquidator reliance was placed on the decision in Union of India v. Seth Spinning Mills Ltd. (in Liquidation),  32 Comp. Cas. 801. This case is, however, distinguishable as it does not have any concern with Section 17 of the U. P. Sales Tax Act or any provisions analogous to it. I am, therefore, satisfied that the appellant's claim under the assessment orders dated the 28th of March, 1964, and the 10th of August, 1964, in respect of the assessment year 1959-60 were wrongly rejected by the official liquidator. As these taxes were also neither due nor payable within the period of 12 months immediately preceding the date of the winding-up, they too were not entitled to any priority. The view taken by me above is however without prejudice to the official liquidator's right to approach, if he is so advised, the sales tax authority whether by way of appeal or revision praying for the recall of the assessment orders in question and for a fresh consideration of the assessments in respect of those assessment years.
15. Thus for the reasons stated above I allow this appeal in part, set aside the decision of the official liquidator in so far as it concerns the amount of sales taxes under the assessment orders dated the 28th of March, 3964, and the 10th of August, 1964, for the assessment year 1959-60, and direct him to entertain the appellants' claim in regard thereto and to consider it in accordance with law. The appeal as regards priority fails. A copy of this judgment shall be supplied to the official liquidator free of charge.