1988 (4) TMI 407 - HC - VAT and Sales Tax

Summary

Issues:
- Recovery of penal interest by the tax authorities
- Application of section 24(3) of the Tamil Nadu General Sales Tax Act, 1959
- Compliance with rule 18 of the Tamil Nadu General Sales Tax Rules, 1959

Analysis:
The case involved writ petitions filed by a sugar mill challenging the recovery of penal interest by the tax authorities. The petitioner contended that penal interest was being sought against the judgment of a Division Bench of the Court. The petitioner faced financial difficulties and sought rescheduling of loans, including exemption from purchase tax and cane cess subsidy until loans were repaid. The petitioner had submitted revised returns and made provisional assessments for the outstanding taxes. The respondents argued that the petitioner had delayed payment of taxes, justifying the levy of interest. The respondents calculated interest based on the arrears of tax and additional sales tax, issuing demand notices for the same. The petitioner relied on a previous judgment to argue against the recovery of interest for the entire period of delay in payment.

The Court considered the submissions of both parties and referred to the relevant provisions of the Act. It noted that the tax authorities had not properly followed section 24(3) and rule 18(3) before initiating proceedings against the petitioner. The Court emphasized the need for a clear application of the previous decision's ratio decidendi in the present cases. Consequently, the Court set aside the notices and remanded the matter back to the tax authorities for proper disposal in accordance with the law and the previous judgment. The Court directed the authorities to consider section 24(3) and rule 18(3) before making a decision and provide the petitioner with an opportunity to be heard. The writ petitions were allowed, and the matters were to be disposed of within two months from the judgment date. No costs were awarded in the case.