2007 (2) TMI 610 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of the notice dated September 26, 2003 issued by the Commercial Tax Officer.
2. Adjustment of excess amount paid by the petitioner for assessment year 1999-2000.
3. Applicability of provisions of the Tamil Nadu General Sales Tax Act, 1959 regarding interest and refund.

Analysis:

1. Validity of the Notice:
The petitioner challenged the notice dated September 26, 2003, demanding payment of tax, surcharge, and resale tax along with interest under section 24(3) of the Tamil Nadu General Sales Tax Act, 1959. The petitioner contended that for the assessment year 1999-2000, an excess amount was paid, which was acknowledged by the Commercial Tax Officer in an order dated March 28, 2002. The petitioner adjusted this excess amount for the assessment year 2002-2003. The High Court observed that the statutory provision allows for adjustment of excess tax paid, and since the first respondent had accepted the excess payment, the impugned notice demanding payment with interest was unsustainable. The Court directed the Commercial Tax Officer to calculate the returns filed by the petitioner and proceed further if any amount was due, without levying interest for belated payment.

2. Adjustment of Excess Amount:
The Court referred to Rule 18(7) of the Tamil Nadu General Sales Tax Rules, 1959, which provides for the adjustment of excess tax paid by a dealer. The rule outlines the procedure for notifying the dealer of any amount due or excess tax for refund. In this case, the Court noted that the excess amount paid by the petitioner for the assessment year 1999-2000 was available with the Department, as acknowledged in form "C" issued by the Commercial Tax Officer. Therefore, the petitioner was entitled to have this excess amount adjusted for future assessments, as per the statutory provisions.

3. Applicability of Provisions of the Sales Tax Act:
The Court emphasized the importance of following the provisions of the Tamil Nadu General Sales Tax Act, 1959, specifically referring to section 7F read with rule 18F of the Sales Tax Rules. It highlighted the obligation of the assessing authority to serve notices in the prescribed forms for demanding payment or notifying adjustments/refunds of tax amounts. The Court reiterated that when there is a statutory provision favoring the petitioner for adjustment of excess tax paid, and the same has been accepted by the Commercial Tax Officer, there is no legal basis for demanding payment with interest as if the amount was not paid in due time. The judgment concluded by directing the Commercial Tax Officer to calculate the returns filed by the petitioner and take further action if any amount was due, in accordance with the law.

In summary, the High Court's judgment focused on upholding the statutory provisions for the adjustment of excess tax paid by the petitioner, dismissing the validity of the notice demanding payment with interest, and directing the tax authority to act in accordance with the law regarding tax assessments and refunds.