2015 (3) TMI 1109 - HC - VAT and Sales Tax

Rejection of the settlement application - Best Judgment assessment - Sections 7(a) and 7(c) - Held that - Petitioner company s properties is sought to be auctioned by tomorrow. Further, it is stated by the learned counsel appearing for the petitioner that the petitioner company is already in a financial crunch. According to the Petitioner Company, the interpretation given by the respondents in respect of the Sections 7 of the Act is wrong. Before even filing of Settlement, an applicant has to necessarily comply with the mandatory conditions laid down in the Scheme. There is no dispute in this regard. Now, the petitioner wants to take advantage of Section 7(a) alone whereas, the authorities, in the case on hand, have invoked 7(a) and 7(c) of the Act together. Therefore, he has come forward with these Writ Petitions for the relief stated earlier. On the date of entering into the settlement enquiry, there was proceedings pending before the Assistant Commissioner, Karur. Such argument cannot be accepted for the reason that there is a provision to the effect that which shall be deemed to have been withdrawn from the date of making of application under sub-section(1) of Section 5. - There is no infirmity or illegality in the orders impunged in these Writ Petitions - Decided against Assessee.

Summary

Issues:
Challenge to rejection of Settlement Order under the Samadhan Act, 2011 based on misinterpretation of Sections 7(a) and 7(c) of the Act.

Analysis:
The petitioner company challenged the rejection of the Settlement Order under the Samadhan Act, 2011, arguing that the respondents misinterpreted Sections 7(a) and 7(c) of the Act. They contended that a Best Judgment assessment under Section 7(a) is distinct from an assessment under Section 7(c), and the rejection was incorrect. The petitioner claimed they were not liable to pay the amount demanded by the respondents. The crux of their argument was that the respondents failed to properly interpret and apply the relevant sections of the Act, potentially causing irreparable loss if their property is auctioned due to financial constraints.

The respondent, represented by the Additional Government Pleader, countered that the petitioner knowingly failed to comply with mandatory provisions of Sections 6 and 7 of the Act when applying for Settlement. They highlighted instances where the petitioner paid significantly less than the required amount, indicating a substantial shortfall. The respondent emphasized that the petitioner's non-compliance with the Settlement Scheme's norms rendered them ineligible for availing the benefits, justifying the rejection of the claim.

The court examined the provisions of Section 7 of the Act, emphasizing that an applicant must fulfill mandatory conditions before filing for Settlement. The petitioner sought to benefit from Section 7(a) alone, while the authorities invoked both 7(a) and 7(c) in the present case, leading to the dispute. The court noted that Section 7 does not provide for an 'either/or' scenario but encompasses all the specified conditions sequentially, as outlined in the Act.

The court agreed with the respondent's argument that the petitioner's interpretation would allow them to delay compliance until the last day after paying the minimum amount, which was impermissible. Despite previous litigation and a remand for fresh orders with a personal hearing, the petitioner still failed to meet the prescribed payment requirements at the time of entering into the Settlement Application, reinforcing the rejection of their claim.

Additionally, the court dismissed the argument regarding pending proceedings before the Assistant Commissioner, stating that the Act deems such proceedings withdrawn from the date of the Settlement application. After thorough discussions and observations, the court found no legal flaws in the impugned orders, leading to the dismissal of all Writ Petitions without costs, thereby closing the connected miscellaneous petitions.