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CS Professional · Insolvency and Bankruptcy - Law and Practice · Winding-Up by Tribunal

Winding up of Bharat Ceramics Ltd by the Tribunal is under way. The tax department initiates proceedings to recover income tax dues from the company and attaches a bank account without seeking the Tribunal's leave. Which statement is correct?

Section 335 does not apply to such recovery. Its sub-section (2) excludes proceedings for recovery of any tax or impost or any dues payable to the Government, so the lack of the Tribunal's leave does not make the tax department's attachment void under that section.

  1. AThe attachment is void under section 335 because no leave was taken
  2. BThe attachment is void because only the Company Liquidator can recover tax
  3. CSection 335 does not apply to proceedings for recovery of tax, impost or dues payable to the GovernmentCorrect
  4. DThe attachment is valid only if the Tribunal ratifies it within one year

Explanation

Section 335(2) states that nothing in the section applies to proceedings for recovery of any tax or impost or any dues payable to the Government. The requirement of leave in section 335(1) therefore does not make the tax recovery attachment void. The first option wrongly ignores this carve-out.

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