2015 (7) TMI 186 - HC - VAT and Sales Tax

Demand of interest on the settled amount - Andhra Pradesh Sales Tax (Settlement of Disputes) Act, 2001 - Held that - The Certificate of Settlement issued under Section 12 of the Act is final and conclusive and once such certificate is issued in Form-III, the dealer/applicant shall be discharged from his liability of paying balance amount of arrears of tax, penalty or interest, if any. Even against the orders levying penalty and interest, there is a provision in the Act itself for settlement by payment of 10% of the tax and interest, but for the fact that as there were no demand notices or orders for payment of interest and penalty, there was no occasion for the petitioner to apply for settling the same. Even against the persons from whom there were dues towards interest and penalty, 90% of such dues is waived. In the absence of any claim against the petitioner, respondent cannot be allowed to charge interest on the amount already settled under the scheme. Further, when the claim of the petitioner is considered as per the scheme notified under Act 41 of 2001, in the absence of any specific provision for collection of interest on the amount settled, it is not open for the respondent to collect the same from the petitioner. - Decided in favour of assessee.

Summary

Issues:
Challenge to demand for interest on arrears of tax under Central Sales Tax Act, 1956 for assessment years 1993-94, 1995-96, and 1996-97 post-settlement under Act 41 of 2001.

Analysis:
The petitioner, a registered dealer, sought a writ of certiorari against orders demanding interest on arrears of tax for specific assessment years under the Central Sales Tax Act, 1956. The petitioner had filed appeals before the Appellate Deputy Commissioner, which were pending when Act 41 of 2001 came into force, providing for settlement of disputes related to arrears of tax, penalty, or interest. The Act required dealers to pay a percentage of disputed tax for settlement, and the petitioner applied for settlement, paid the required amount, and received a Certificate of Settlement, leading to withdrawal of appeals.

The respondent later issued demand notices for interest on settled amounts, prompting the petitioner to file a writ petition. The petitioner argued that once the tax amount was settled and paid, no interest could be collected post-settlement, as it was not covered under Act 41 of 2001. The respondent contended that interest was leviable as per the normal provisions of the APGST Act since Act 41 of 2001 did not address interest explicitly.

The Court analyzed Act 41 of 2001, noting its intent for expeditious recovery of arrears and the waivers provided for disputed taxes, interest, and penalties. The Settlement Certificate issued to the petitioner discharged the liability for the settled amounts, including interest. The Court emphasized that once the tax arrears were settled, the respondent could not demand interest subsequently. The Certificate of Settlement under the Act was final and conclusive, discharging the petitioner from further payment obligations.

Concluding that the demand notices for interest were unwarranted post-settlement, the Court allowed the writ petition, quashing the demand notices for the assessment years in question. The judgment highlighted that in the absence of specific provisions for interest collection post-settlement under Act 41 of 2001, the respondent could not levy interest on settled amounts. The Court ruled in favor of the petitioner, emphasizing the finality of the Settlement Certificate and the discharge of liabilities upon settlement.