2010 (12) TMI 1099 - HC - VAT and Sales Tax

Whether as per section 7 of the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2008, the dealer needs to pay one-third of arrears of tax pending collection on the date of application along with interest calculated at six per cent per annum on the arrears of tax and on such payment of tax, the balance of tax and interest and the entire penalty shall be waived? Held that - Applying section 7(b) of the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2008, all that the petitioner has to pay is of the arrears of tax along with interest at six per cent per annum on the said amount of of the arrears of tax. On payment of the same, the balance of arrears of tax, interest and penalty would stand waived as per the provisions of the Act. Rightly, the petitioner has worked his calculation in the application in form I dated March 31, 2009. Consequently, going by section 7(b) of the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2008, no hesitation in setting aside the order dated August 5, 2010 demanding further payment by way of interest on the belated payment of tax, which, evidently, is contrary to section 7(b) of the Act. Appeal allowed.

Summary

Issues:
Challenge to order under Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2008.

Analysis:
The petitioner contested an order made under the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2008, claiming that as per section 7 of the Act, one-third of arrears of tax pending collection along with interest must be paid to have the balance of tax, interest, and penalty waived. The petitioner's assessment for 1991-92 was modified by the Sales Tax Appellate Tribunal, resulting in a balance of tax and penalty. The petitioner calculated the liability under the Act to be Rs. 2,33,390, which was remitted. However, the Joint Commissioner demanded Rs. 2,87,962, leading to the rejection of the petitioner's application for settlement. The petitioner argued that the Act only required payment of one-third of arrears of tax with interest at six per cent, which was already done, and the additional demand was unjustified.

The court examined the definitions and provisions of the Act, particularly section 2(b and 7(b). Section 2(b) defined arrears of tax, penalty, or interest as amounts pending collection on the date of application. Section 7(b) specified the payment required for settlement, stating that one-third of arrears of tax with interest at six per cent should be paid to waive the balance of tax, interest, and penalty. The court noted that the Act did not include interest on arrears in the one-third payment requirement. The petitioner had already paid the calculated amount as per the Act, and the additional demand by the Joint Commissioner was deemed contrary to the Act's provisions.

Consequently, the court set aside the order demanding further payment, ruling in favor of the petitioner. The second respondent was directed to accept the application and issue the settlement certificate as per the Act's provisions. The court quashed the impugned order and allowed the writ petition without costs, closing the connected miscellaneous petition.