2018 (2) TMI 1655 - HC - VAT and Sales Tax

Issuance of C-form - case of respondent is that they had admitted their liability and submitted that it was not their intention not to pay tax. But due to unexpected situation and stringent financial crisis, they were unable to pay tax. Held that - The settled principles of interpretation are that the court must proceed on the assumption that the legislature did not make a mistake and that it did what it intended to do. The court must, as far as possible, adopt a construction which will carry out the obvious intention of the legislature. Undoubtedly if there is a defect or an omission in the words used by the legislature, the court would not go to its aid to correct or make up the deficiency. The court could not add words to a statute or read words into it which are not there, especially when the literal reading produces an intelligible result. The court cannot aid the legislature s defective phrasing of an Act, or add and mend, and, by construction, make up deficiencies which are there. Courts have consistently held in taxing statute, there is no equity. If tax has not paid as declared, within the time provided there for, consequences would follow. When the dealer had collected tax from the buyer, tax should be paid to the Government, within time. Retention of the same would amount to unjust enrichment. The respondent/assessee, cannot be permitted to avail the facility of on-line generation of Form C declaration. Appeal allowed - decided in favor of Revenue.

Issues Involved:

1. Validity of the impugned notice dated 12/12/2017.
2. Admissibility of paying tax in installments under the Puducherry Value Added Tax Act, 2007.
3. Legality of withholding C-forms due to non-payment of tax.
4. Interpretation of statutory provisions related to tax payment and assessment.

Detailed Analysis:

1. Validity of the Impugned Notice:

The impugned notice dated 12/12/2017, issued by the Commercial Tax Officer, Mahe, stated that the dealer had defaulted on monthly tax payments for August, September, and October 2017, totaling ?2,18,02,440/-. The notice highlighted the dealer's partial payments and instructed the dealer to remit the outstanding amount by 22/12/2017, failing which recovery action would be initiated under Section 37 of the Puducherry Value Added Tax Act, 2007. The court noted that the first respondent admitted the tax liability but cited financial constraints for the delay in payment.

2. Admissibility of Paying Tax in Installments:

The court examined the provisions of the Puducherry Value Added Tax Act, 2007, specifically Section 24 and Section 37. Section 24 mandates that every registered dealer must file a tax return within fifteen days after the end of the tax period and pay the tax due along with the return. The court emphasized that there is no provision in the Act allowing dealers to pay tax in installments when self-assessment is made and returns are filed. The court concluded that the writ court's direction permitting the dealer to pay ?35,00,000/- towards arrears and unlock the online generation of Form-C was not supported by the statute, as the statute does not allow installment payments for self-assessed tax.

3. Legality of Withholding C-Forms:

The appellants argued that under Section 43 of the Puducherry Value Added Tax Act, 2007, the competent authority is empowered to withhold the issuance of C-forms if tax is not paid within the stipulated time. The court agreed with this interpretation, stating that the statute clearly allows withholding of C-forms when there is a default in tax payment. The court rejected the first respondent's argument that C-forms should not be withheld until assessment orders are passed, as the liability to pay tax arises upon self-assessment and submission of returns.

4. Interpretation of Statutory Provisions Related to Tax Payment and Assessment:

The court reiterated the principles of strict interpretation of taxing statutes, emphasizing that there is no equity in tax law and the provisions must be applied as written. The court cited several precedents, including CIT v. Badhraja and Company, Dadi Jagannadham v. Jammulu Ramulu, and others, to support the view that courts cannot add or substitute words in a statute to alter its clear meaning. The court concluded that the writ court's direction to allow installment payments and unlock the online generation of Form-C was contrary to the statutory provisions and principles of tax law interpretation.

Conclusion:

The court set aside the writ court's order dated 22/12/2017, allowing the dealer to pay tax in installments and directing the unlocking of Form-C generation. The court held that the statutory provisions under the Puducherry Value Added Tax Act, 2007, do not permit installment payments for self-assessed tax and upheld the legality of withholding C-forms due to non-payment of tax. The writ appeal was allowed, and the connected miscellaneous petition was closed.

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