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2021 (3) TMI 486 - HC - VAT and Sales Tax


Issues:
Challenge to assessment order regarding Interest Free Sales Tax (IFST) deferral loan and subsequent rejection of objections by Assessing Officer, Tribunal's dismissal of petitions seeking quashing of order demanding interest, Applicability of Notification G.O.Ms.No.119 dated 13.4.1994 to petitioner's case.

Analysis:
The petitioner, a registered dealer, challenged the assessment order by the Assessing Officer regarding the IFST deferral loan availed and repaid belatedly. Despite objections, the Assessing Officer confirmed the proposal, leading to a demand for interest under Section 24(3) of the Act. The petitioner approached the Tribunal seeking relief, but the petitions were dismissed, prompting the current writ petitions before the High Court.

The central issue revolves around the applicability of Notification G.O.Ms.No.119 dated 13.4.1994 to the petitioner's case. The Government's scheme aimed to encourage industries by providing concessions, including deferral of sales tax for specified periods. The petitioner, having commenced production in 1991 and applied for eligibility, faced delays in receiving the eligibility certificate, leading to continued sales tax payments until 1993 when the certificate was finally issued.

A critical aspect is the condition in the eligibility certificate regarding sales tax deferral, subject to specific terms related to production capacity and incremental tax liability. The petitioner sought rescheduling of the deferral period due to delays in obtaining the eligibility certificate. Despite a clean chit from an inspection report, the Assessing Officer issued a show cause notice alleging wrongful availing of the IFST deferral scheme.

The High Court's analysis delves into legal precedents, notably a judgment highlighting the prospective application of G.O.Ms.No.119 dated 13.4.1994 and its benchmark conditions for eligibility. The Court emphasized that the petitioner, having received the eligibility certificate before the introduction of the benchmark condition, should not be bound by the subsequent regulation. The Court also referenced past decisions to support its interpretation of the legal framework governing such schemes.

Ultimately, the High Court allowed the writ petitions, setting aside the Tribunal's order and quashing the demands made by the Assessing Officer. The Court found the Tribunal's failure to consider crucial findings and legal principles as a serious error, leading to the grant of relief to the petitioner. The judgment underscores the importance of aligning regulatory actions with the specific circumstances and timelines applicable to each case to ensure fair treatment under the law.

 

 

 

 

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