2015 (7) TMI 269 - HC - VAT and Sales Tax

Demand of interest on delayed payment of tax - Held that -Petitioner has been manufacturing the Indian Made Foreign Liquor (IMFL) and selling the same only to the Tamil Nadu State Marketing Corporation Limited (TASMAC) and also further taking note of the fact that the petitioner had cleared the entire tax liability, except a sum of ₹ 68,00,000/- as demanded in the impugned notice, instead of granting ten equal installments as prayed for by the petitioner, is inclined to grant four equated monthly installments to the petitioner to clear the above said liability. Accordingly, by setting aside the impugned notice, the petitioner is directed to pay the sum of ₹ 68,00,000/- in four equal monthly installments - Decided partly in favour of assessee.

Summary

Issues:
- Writ petition seeking issuance of a writ of certiorarified mandamus to quash a demand notice for tax liability and seek installment payment for interest arrears.
- Petitioner's financial crunch leading to inability to pay the remaining tax amount.
- Previous court orders for payment of tax liability in installments.
- Request for extension of time to pay interest arrears in installments.
- Dispute over the number of installments to be granted for clearing the interest arrears.

Analysis:
The writ petition was filed by M/s Imperial Spirits and Wine Private Limited, Coimbatore, to challenge a demand notice for tax liability and seek installment payment for interest arrears. The petitioner, engaged in the manufacture and sale of Indian Made Foreign Liquor (IMFL), faced a tax liability of Rs. 590.05 crores, of which Rs. 560.85 crores had been paid. Due to financial constraints, the remaining amount was not paid, leading to a demand notice for Rs. 25,77,03,167 issued by the Assistant Commissioner of Commercial Taxes. Previous court orders directed the petitioner to pay the arrears in installments, with the final installment due on 31.3.2015. However, a subsequent notice demanded Rs. 68,00,000 as interest within three days, prompting the petitioner to seek time for payment in ten installments.

The petitioner's senior counsel argued that the financial crunch beyond their control prevented immediate payment of the interest arrears, requesting ten equal installments for clearance. Conversely, the Additional Government Pleader objected, citing the petitioner had already been granted sufficient time. The court acknowledged the petitioner's compliance with tax liability except for the interest arrears, considering the exclusive sale of products to TASMAC. Instead of the requested ten installments, the court granted four equated monthly installments to pay the Rs. 68,00,000 interest. The first installment was due on 17th July 2015, with subsequent payments on or before the 17th of succeeding months, thereby disposing of the writ petition and closing the related motion.