2020 (8) TMI 780 - HC - VAT and Sales Tax

Waiver of sales tax - validity of impugned G.O.(Ms).No.107 dated 02.08.2016 - It is the case of the petitioner that it has not collected tax for the period between 03.02.1983 and 31.01.1985, and therefore its case should be considered favourably - period between 03.02.1983 and 31.01.1985 covering the Assessment Years 1983-84 1984-85. HELD THAT - The impugned G.O. has been passed merely based on records, but without any discussion on the representation of the petitioner and the communication of the principal secretary/Commissioner of Commercial tax in G.O.Ms.No.157, Commercial Taxes and Religious Endowment Department dated 22.04.1996 - The introduction of Entry 150 pre-dated the 46th amendment to the Constitution of India pursuant to which Sub-clause (29-A) was incorporated under Article 366 to the constitution of India, w.e.f. 02.02.1983. By virtue of the aforesaid amendment, the definition on tax of sale or purchase of goods was for first time introduced in the Constitution. Sub-Clause (f) to the Clause (29-A) to Article 366 introduced a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made. The Entry 150 of the TNGST, 1959 was struck down. Later its validity was upheld by the Hon'ble Supreme Court. The Government of Tamilnadu also issued G.O.Ms.No.140 dated 11.06.1999 and granted waiver on the condition that the Hotelier/registered dealer had not collected the tax from the consumers. This was modified by the Tamil Nadu Taxation Special Tribunal. The fact that the petitioner had also been given the exemption for the between 01.02.1985 and 24.03.1989 during the period when Entry 150 was declared as ultravires, is a factor to be considered by the 1st respondent while passing orders if indeed the petitioner had not collected tax. Since the impugned G.O has been passed without considering the submission of the petitioner, the 1st respondent is directed to consider the plea of the petitioner and to pass a fresh order after hearing the petitioner, within a period of three months from the date of receipt of a copy of this order - petition disposed off.

Summary

Issues:
Challenging the rejection of waiver of sales tax for a specific period under a Government Order.
Validity of Entry No.150 of the TNGST Act, 1959 and subsequent legal challenges.
Impact of Supreme Court decisions on the levy of tax on food articles in hotels.
Enforcement of recovery proceedings following Supreme Court directions for tax waiver.
Assessment of tax liability and collection for the disputed period.
Delay in considering representation for tax waiver under relevant legal provisions.
Analysis:
The petitioner challenged the rejection of the waiver of sales tax for the period between 03.02.1983 and 31.01.1985 under Government Order (G.O.) No.107 dated 02.08.2016. The validity of Entry No.150 of the TNGST Act, 1959 was disputed, particularly regarding the levy of sales tax on food articles in star hotels. This entry was initially challenged and struck down by the High Court but later upheld by the Supreme Court in subsequent legal proceedings.

Following the Supreme Court's decision upholding the levy of tax on food articles, recovery proceedings were initiated against the petitioner. The petitioner sought waiver/remission of tax for the period between 01.02.1985 and 24.03.1989, as directed by the Supreme Court. Subsequently, waiver of interest was granted to the petitioner under G.O.Ms.No.140, subject to conditions like not collecting tax from customers.

The petitioner faced multiple notices and challenges regarding tax remittance for various periods. The Tamil Nadu Taxation Special Tribunal directed the petitioner to pay tax for the disputed period and provided specific directions for assessments and exemptions based on tax collection records.

Despite representations for tax waiver under relevant legal provisions, the petitioner faced delays in the decision-making process. The High Court directed the concerned authority to reconsider the petitioner's plea and pass a fresh order after hearing the petitioner within a specified timeframe. The Court emphasized the need for a fresh assessment considering the petitioner's claim of not collecting tax during the disputed period, despite constitutional amendments related to tax definitions during that time.

In conclusion, the High Court disposed of the Writ Petition with observations to ensure a fair consideration of the petitioner's plea for tax waiver, highlighting the importance of due process and legal compliance in tax matters.