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2019 (5) TMI 120 - HC - VAT and Sales TaxDemand of sales tax for the deferral period - Eligibility Certificate in force - violation of the Condition No.5.4 of the Eligibility Certificate - HELD THAT - Since the petitioner admitted the fact that they have been issued with the Certificate of Eligibility for deferral of Sales Tax to a maximum amount of ₹ 93,46,000/- for a period of 9 years and also further claimed that they have not violated the Condition No.5.4 of the Eligibility Certificate because they have effected sale of only a part of the plant and machinery to the tune of ₹ 1,01,050/- which is nothing to do with the violation of Condition No.5.4 of the Eligibility Certificate and consequently, they have not received any one of the notices dated 13.09.2005, 16.10.2006, 6.12.2006 and 13.2.2007 since one of the staffs working in their company had not placed anyone of the notices before the responsible officer, this Court deems it fit to give one more opportunity to the petitioner to put forth their case. The petitioner is directed to appear before the Assistant Commissioner (CT), Zone-2, Chennai, III Floor, PAPJM Building, Chennai-6 in his office at 3.00 p.m. on 06.06.2019 along with all the documents. On such appearance of the petitioner before the 1st respondent, he shall decide the case of the petitioner afresh on merits - petition allowed by way of remand.
Issues:
Challenge to order demanding sales tax for deferral period based on Eligibility Certificate validity. Analysis: The petitioner, a registered dealer, challenged an order by the Assistant Commissioner demanding sales tax for the deferral period, arguing that as long as the Eligibility Certificate issued by the General Manager of District Industries Centre was valid, the sales tax could not be demanded. The Certificate of Eligibility granted a deferral of sales tax up to a certain amount for a specified period to promote industries. The petitioner was required to retain and utilize the sales tax for industry promotion and repay it later. However, a dispute arose when the Assistant Commissioner objected to the insurance policy taken by the petitioner for a lesser amount than the total deferral amount, leading to a demand for cancellation of the deferral facility. The Assistant Commissioner issued a Show Cause Notice regarding the sale of plant and machinery, proposing to cancel the sales tax deferral, requiring a lump sum payment with interest. The petitioner claimed they did not receive the notice, resulting in the impugned order. The petitioner contended that they were not served the notices to file balance sheets, which could have clarified the situation regarding the sale of plant and machinery, not related to the violation of the Eligibility Certificate condition. The respondents argued that the petitioner violated Condition No.5.4 of the Eligibility Certificate by selling plant and machinery despite the prohibition. The impugned order was based on the petitioner's failure to respond to multiple notices to file balance sheets and renew insurance policies. The order proposed canceling the deferral scheme and agreement, directing the petitioner to pay the entire deferral amount. The Court acknowledged the issuance of the Certificate of Eligibility and the petitioner's claim of not violating the Certificate's condition due to the specific nature of the sale of plant and machinery. Considering the petitioner's assertion of not receiving notices due to internal miscommunication, the Court decided to give the petitioner another opportunity to present their case. Consequently, the Court set aside the impugned order and directed the petitioner to appear before the Assistant Commissioner with all documents for a fresh decision within three months, without influence from the previous order. The Writ Petition was disposed of without costs, and connected Miscellaneous Petitions were closed.
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