By Dr. K. Shivaram, Ajay R. Singh, Advocates
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This appeal was directed against the order of the Official Liquidator wherein the present appellant (Commercial Tax, Government of M.P.) had been ranked as a preferential creditor. The appellant contended that in terms of the provisions of section 33C of the Madhya Pradesh General Sales Tax Act, 1958 and section 53 of the M.P. Commercial Tax Act, 1994, any amount of tax/penalty/interest payable by a dealer or other Person under this Act shall be first charge on the property of the dealer or Such person and as such he be treated pari passu with the secured creditors. The claim of the appellant is in the sum of Rs. 1,40,60,422 ; they are sales tax, Central tax and entry tax dues payable by the company (in liquidation) for its Morena unit and Gwalior unit. The appellant is aggrieved by the finding returned by the Official Liquidator that he be ranked as a preferential creditor and not a secured creditor.
The Court observed that the statutory mandate contained in this provision is clear. It starts with a non obstante clause. It clearly states that notwithstanding any thing contained in any other provision of this Act or any other law for the time being in force, the dues of the workmen and debts due to the secured creditors to the extent that such debts rank under clause (c)of the proviso to s/s. (1) of section 529 shall be paid pari passu and in priority to all other debts.
The claims made by the appellant relate to his tax dues which as per his submission would categorise u/s. 53 of the M.P. Commercial Tax Act, 1994. Section 53 of the M.P. Commercial Tax Act,1994 clearly stipulates that this provision is subject to the provision of section 530 of the Companies Act,1956. Section 530 deals with the dues of the company to a Central or a State or a local authority of Revenue, taxes, cesses, etc.
Provisions of section 529A of the Companies Act (a Central legislation) have to override the provisions of section 53of the M.P. Commercial Tax Act of 1994 (a State legislation). Even otherwise section 53 of the Act of 1994 (under which the appellant is claiming his right) clearly specifies that the tax liability will be subject to the provisions of section 530 of the Companies Act; section 530 of the Companies Act has to be read subject to the provisions of section 529A of the said Act. There appears to be no conflict between the State Act and the Central Act. That apart, even if there is a conflict between a State legislation and a Central legislation, the Central legislation must prevail.
Commissioner, Commercial Tax, Government of M.P. vs. Official Liquidator (2012) 56 VST 335 (Del.) (High Court)
