2018 (7) TMI 1569 - HC - VAT and Sales Tax

Settlement of arrears of tax - rejection of Settlement application under Tamil Nadu Sales Tax Settlement of Arrears Act, 2001 on the ground that the petitioner has not paid 90% of the amount payable under Section 6(3) of the Settlement Act, along with the application. Held that - The application for settlement filed by the petitioner was kept pending for three years and without affording an opportunity to the petitioner to make out any deficit (assuming so), the first respondent should not have rejected the application, especially when, Rule 3(5) provides for 10 days time to be granted for making good the deficit, if any. Apart from that, while computing the amount payable by the petitioner for being entitled to pursue the application under the Settlement Act, the authority should have afforded an opportunity to the petitioner, especially when, decision was taken after three years, after the application was lodged - In the light of the procedural flaw committed by the first respondent in considering the application filed by the petitioner for settlement, this Court is inclined to interfere with the impugned order. The matter is remanded to the first respondent with a direction to the first respondent to afford an opportunity of personal hearing to the petitioner - petition allowed by way of remand.

Summary

Issues:
Challenge to rejection of application under Tamil Nadu Sales Tax Settlement of Arrears Act, 2001 due to non-payment of 90% of amount payable under Section 6(3). Preliminary objection on maintainability due to delay in filing Writ Petition. Argument on maintainability in the context of Settlement Act's purpose. Assessment Officer's instructions reiterating rejection grounds. Comparison with a previous case for non-compliance with statutory requirements. Allegation of arbitrary decision in finding short payment under Section 7(1) and Rule 3(5) of the Settlement Act. Request for setting aside impugned order and remanding for recomputation. Procedural flaws in decision-making process under the Settlement Act. Interpretation of petitioner's willingness to pay differential amount. Court's interference based on procedural flaws.

Analysis:

1. The Writ Petition challenges the rejection of the application under the Tamil Nadu Sales Tax Settlement of Arrears Act, 2001, citing non-payment of 90% of the amount due under Section 6(3). The respondent raised a preliminary objection on the maintainability of the Writ Petition due to a delay in filing, arguing that the delay should lead to dismissal. However, the Court opined that technical grounds should not defeat the purpose of the Settlement Act and noted a significant delay of three years in processing the application, questioning the respondent's explanation for the delay.

2. The Assessment Officer reiterated the grounds for rejection and argued that the petitioner should have filed an appeal instead of the Writ Petition. Reference was made to a previous case where non-compliance led to rejection upheld by the Court. The petitioner contended that the impugned order was arbitrary, emphasizing the correct interpretation of the amount payable under Section 7(1) and disputing the alleged short payment under Rule 3(5) of the Settlement Rules.

3. The Court highlighted procedural flaws in the decision-making process, emphasizing the need for proper verification and consideration of the petitioner's application. It noted that the first respondent should have allowed an opportunity to rectify any deficit, especially considering the delay in processing the application. The Court also analyzed the petitioner's letter indicating a willingness to pay the differential amount, interpreting it as a concession rather than an unequivocal admission of lapse.

4. Ultimately, the Court decided to set aside the impugned order and remand the matter to the first respondent for a fair hearing, submission review, and granting reasonable time for any deficit payment. The Court intervened based on the procedural flaws observed in the decision-making process, ensuring a just and thorough consideration of the petitioner's application under the Settlement Act.