2009 (10) TMI 879 - HC - VAT and Sales Tax

As per section 2(1)(b) of the Act, arrears relate to tax, penalty and interest for which assessment has been made prior to April 1, 2002 and pending collection on the date of filing of application. If the applicant went on appeal against the entire demand and if the appeal resulted in remand subsequently, i.e., after April 1, 2002, after fresh assessment is made, whether the dealers are eligible under the scheme? - Held that - When the entire assessment had been set aside on appeal or revision even though the assessment had been made prior to April 1, 2002 it becomes non est since any fresh assessment made and demands raised thereupon subsequently after April 1, 2002 would not be eligible to be covered under this scheme - petition allowed.

Summary

Issues:
1. Interpretation of the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2008 regarding eligibility for benefits under the one-time settlement scheme.
2. Applicability of the settlement scheme when original orders of assessment are set aside and matters remitted back for a fresh order.

Analysis:
1. The petitioner sought to challenge a clarification issued by the first respondent which disentitled them to the benefits of the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2008. The clarification raised a query regarding cases where the original orders of assessment are set aside and remitted back for a fresh order. The circular stated that any fresh assessment made after April 1, 2002, following a remand, would not be eligible under the scheme. However, the definition of "arrears" in the Act includes tax, penalty, or interest for which assessment has been made prior to April 1, 2002, irrespective of the date of the order. The High Court held that the word "arrears" relates to the tax, penalty, or interest for which the assessment was made, regardless of the date of the order, and that the fresh order passed after remand should be considered as a substitute for the original order.

2. The Court emphasized that when an order of assessment is set aside on appeal and the matter is remanded, the fresh order effectively replaces the original order. Therefore, the date of the order, even if passed after remand, should not deprive the petitioner of the benefits of the settlement scheme. The Court reasoned that the fresh order was issued due to the appellate authority finding fault with the original order, and thus, the petitioner should not be denied the benefit of the scheme. Consequently, the Court allowed the writ petitions, ruling in favor of the petitioner and closing the connected miscellaneous petition without costs.