2009 (11) TMI 886 - HC - VAT and Sales Tax

Levy of tax on the receipt of royalty charges, for the usage of trade mark - Transfer of the right to use the Trade Mark - taxability

Summary

Issues:
1. Eligibility for settlement under the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2008.
2. Interpretation of assessment orders and remands by the Assessing Officer.
3. Application of the Liberalized Samadhan Scheme.
4. Clarification on the benefits of the Act by the first respondent.
5. Validity of the orders passed by the Assessing Officer.

Issue 1: Eligibility for settlement under the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2008:
The petitioner, a manufacturer and dealer in tooth powder, sought a settlement certificate under Section 8 of the Act for arrears raised due to tax levied on royalty charges. The Act allowed settlement for arrears raised before 1.4.2002 without pending appeals or revisions. The petitioner applied for settlement, but the first respondent clarified that orders set aside and remanded post-1.4.2002 would not qualify for settlement under the Act.

Issue 2: Interpretation of assessment orders and remands by the Assessing Officer:
The Assessing Officer initially levied taxes on royalty charges, which were later challenged through appeals and remands. Subsequently, fresh assessment orders were passed post-1.4.2002, leading to demands raised by the Assessing Officer. The petitioner contended that the orders set aside and remanded should be considered for settlement under the Act.

Issue 3: Application of the Liberalized Samadhan Scheme:
The Government introduced the Scheme for settling tax arrears, allowing settlement for pending arrears as of 31.3.2002 without pending appeals or revisions. The petitioner sought settlement for arrears raised for certain years, emphasizing the need to consider the original order set aside for settlement eligibility.

Issue 4: Clarification on the benefits of the Act by the first respondent:
The first respondent clarified that post-1.4.2002 demands resulting from orders set aside and remanded would not qualify for settlement under the Act. The petitioner challenged this clarification through a writ petition under Article 226 of the Constitution of India.

Issue 5: Validity of the orders passed by the Assessing Officer:
The Assessing Officer's orders, assessments, and demands were subject to multiple appeals, remands, and revisions. The petitioner argued for settlement under the Act based on the original orders set aside and remanded, despite subsequent assessments post-1.4.2002. The court analyzed similar cases and held that fresh orders post-remand should be considered for settlement, allowing the petitioner's writ petition and granting the benefits of the Scheme.

This detailed analysis highlights the legal complexities surrounding the eligibility for settlement under the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2008, and the interpretation of assessment orders, remands, and clarifications provided by the authorities involved.