2017 (11) TMI 135 - HC - VAT and Sales Tax

Adjustment of excess paid tax - Form No.I - Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 - Section 6(4) of the Samadhan Act - Held that - Section 7(1)(b) of the Act would be relevant as the petitioner has disputed the tax as well as the penalty, in terms of the said provision, the petitioner has to pay 50% of the disputed tax and since he has also disputed the penalty, he has remitted 25% of the 50% of the tax in dispute. The language in the statute is clear that the 25% is not on the penalty imposed, but it is on 50% of the tax in dispute - on a plain reading of Section 7(1)(b) of the Act would show that whatever payments paid towards the disputed tax could very well be reckoned for payment towards the dispute regarding penalty because what is directed to be paid is 25% of such 50% of the tax in dispute - petition dismissed - decided against petitioner.

Summary

Issues:
Challenge to rejection of application under Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 for adjustment of excess tax paid towards penalty under Samadhan Scheme.

Analysis:

1. The petitioner filed a writ petition challenging the rejection of their application under the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002, seeking to adjust the excess tax paid towards the penalty. The petitioner remitted 50% of the disputed tax but had already paid more than the required amount. The 1st respondent rejected the application citing Section 6(4) of the Samadhan Act, which prohibits the adjustment or refund of excess payments.

2. The petitioner argued that the excess tax should be adjusted towards the penalty, citing a decision by the Tamil Nadu Taxation Special Tribunal allowing such adjustments in similar cases. The 2nd respondent maintained the rejection stance, emphasizing the restrictions under Section 6(4). The question arose whether the petitioner could seek adjustment under Section 7 of the Act, which outlines the determination of amounts payable under different dispute categories.

3. Section 7(1)(b) of the Act became pivotal as it pertains to cases where both tax and penalty are disputed. The provision mandates payment of 50% of the disputed tax and 25% of 50% of the tax in dispute if penalty is contested. The court interpreted that the 25% payment is not on the penalty itself but on the tax amount, recognizing the potential hardship if penalties significantly exceed the tax. Therefore, the court concluded that payments made towards disputed tax could be considered for penalty disputes under Section 7(1)(b).

4. During the proceedings, the Additional Government Pleader presented an order showing a Certificate of Settlement of Arrears issued by the Joint Commissioner, indicating a resolution in the matter. Consequently, the court, having deliberated on the issue despite no requirement for adjudication, closed the writ petition without costs, considering the presented settlement certificate.

This detailed analysis highlights the key legal interpretations and considerations made by the court in addressing the challenge to the rejection of the application under the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002, emphasizing the statutory provisions and relevant precedents in arriving at its decision.