2020 (4) TMI 37 - HC - VAT and Sales Tax

Deferral Scheme - deferral availed before reaching the volumes of base sale and base production fixed by the TIIC Limited, Chennai - case of the petitioner is that as per the terms and conditions of the scheme, once the industry crosses the base volume of production, the interest free deferral scheme would come into operation - HELD THAT - The petitioner is granted two weeks time from the date of receipt of a copy of this order for filing appropriate objections. The petitioner is also permitted to adduce evidence and file necessary documents / forms along with their objections. Petition disposed off.

Summary

Issues:
Challenge to tax and penal interest imposed on petitioner for deferral availed before reaching base sale and production volumes fixed by TIIC Limited.

Analysis:
The petitioner challenged the tax and penal interest imposed for deferral availed before reaching the volumes of base sale and production fixed by TIIC Limited, Chennai under Section 24(3) of the erstwhile TNGST Act. The petitioner argued that once the industry crosses the base production volume, the interest-free deferral scheme should come into operation. They claimed to have reached the base value of production and availed the deferral scheme for the full period of five years, paying the due tax after the deferral period ended in 2002. Thus, they contended that the notice was arbitrary and illegal, seeking its annulment.

The respondent, based on the counter affidavit, stated that the deferral of tax was sanctioned for five years, and repayment was scheduled from 2002 to 2007. The eligibility for deferral was linked to the increased volume of production/base sale volume, determined by the highest volume achieved in any one year during the last three years. The petitioner was found to have reached the specified sales ceiling in November 2000, making them eligible for the deferral scheme from that point. The notice issued in 2012 was regarding the incorrect availment of deferral, amounting to ?15,30,300, with the petitioner given 15 days to file objections.

During the hearing, the petitioner sought permission to file objections to the show cause notice, which was granted by the court. The respondent had no serious objections to this relief. The court ordered the petitioner to file objections within two weeks, allowing them to submit evidence and necessary documents/forms. The respondent was directed to consider the objections, provide a personal hearing to the petitioner, and pass orders within four weeks from receiving the objections.

In conclusion, the court disposed of the writ petition, granting the petitioner permission to file objections to the show cause notice. No costs were awarded, and the related miscellaneous petition was closed as well.