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2022 (12) TMI 462 - HC - VAT and Sales TaxEligibility for filing application under settlement of dispute scheme - Recovery of sales tax arrears - attachment of property - settlement of dispute - whether respondent was a dealer within the meaning of Section 2(1)(a) r/w Section 2(1)(e) of the Settlement Act, 2010 and therefore eligible to file a declaration under the Settlement Act, 2010 or whether the respondent stepped into the shoes of the tax defaulter namely Tvl.Srinivasa Chemicals Pvt. Ltd., while purchasing the assets of the defaulter in an auction? HELD THAT - Prior to Settlement Act, 2010, a Scheme under the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2006 was there. There was a specific bar for filing an application for settling the dues on a person who had availed deferral and had defaulted. However, under the Settlement Act, 2010, such a restriction is not there. Therefore, under the provisions of the Settlement Act, 2010, the defaulter namely Tvl.Srinivasa Chemicals Pvt. Ltd. would have been entitled to file an application to settle the case - To be eligible for the benefit of the Settlement Act, 2010, the person should have been a dealer within the meaning of Section 2(1)(a) r/w Section 2(1)(e) of the said Act. The respondent herein (i.e.petitioner in W.P.Nos.2784, 2775, 2780, 2781, 2788, 2785 2787 of 2020) was not a dealer . The respondent has also not stepped into the shoes of the defaulting dealer viz. Tvl.Srinivasa Chemicals Pvt. Ltd., to avail the benefit of the Settlement Act, 2010 - The respondent has also not produced any documents to substantiate that the respondent was a dealer for the purpose of Section 2(1)(a) r/w Section 2(1)(e) of the Act - The respondent herein was merely an auction purchaser who purchased the stressed asset of defaulter Tvl. Srinivasa Chemicals Pvt. Ltd. in as is where is condition for a bid amount of Rs.70,00,000/- in the auction held on 01.12.2009 by the TIIC. Considering the fact that concession was given by entertaining the applications filed by the respondent under the aforesaid Act and considering the fact that the order of the Designated Authority was not challenged by the Commercial Tax Department in the manner known to law, we do not wish to deny the partial benefit conferred on the respondent vide impugned order dated 29.04.2021 under the Settlement Act, 2010 - the direction in the impugned order of the Court directing a refund of Rs.14,41,755/- out of Rs.27,46,304/- paid by the respondent deserves to be interfered. The order of the learned Single Judge directing appropriation of the amounts only to those years for which assessment orders were available cannot be countenanced. The writ petition filed by the respondent is dismissed and it is directed that the respondent should pay the differential sum of Rs.41,48,920/- (68,95,224 - 27,46,304) to the Commercial Tax Department within a period of 8 weeks from the date of receipt of a copy of this order.
Issues Involved:
1. Eligibility of the respondent to file a declaration under the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2010. 2. Appropriateness of the order passed by the learned Single Judge requiring interference. Issue-Wise Detailed Analysis: 1. Eligibility of the Respondent to File a Declaration Under the Settlement Act, 2010: The primary issue was whether the respondent qualified as a "dealer" under the Settlement Act, 2010. According to Section 2(1)(a) of the Act, an "applicant" must be a dealer as defined in the relevant tax enactments, including the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act, 1959) and the Central Sales Tax Act, 1956 (CST Act, 1956). The respondent, having purchased the property of a defaulter (Tvl. Srinivasa Chemicals Pvt. Ltd.) in an auction, was not a "dealer" and did not step into the shoes of the original tax defaulter. Therefore, the respondent was ineligible to file an application under the Settlement Act, 2010. The court concluded that the application of the respondent should not have been entertained by the designated authority, the Joint Commissioner (Sales Tax) North. 2. Appropriateness of the Order Passed by the Learned Single Judge: The learned Single Judge had ordered a refund of Rs.14,41,755/- to the respondent, which was challenged by the appellants. The court noted that the respondent had agreed to pay a sum of Rs.62,05,701/- to settle the sales tax arrears but was ordered to pay only Rs.13,04,279/-, resulting in an unexpected windfall for the respondent. The court found this inappropriate as it did not align with the respondent's own admission of liability. Consequently, the court set aside the learned Single Judge's order directing the refund and dismissed the writ petition filed by the respondent. The respondent was directed to pay the differential sum of Rs.41,48,920/- to the Commercial Tax Department within eight weeks, failing which, the department could initiate revenue recovery proceedings. Conclusion: The court allowed the writ appeal, set aside the impugned order of the learned Single Judge, and dismissed the writ petition filed by the respondent. The respondent was directed to pay the outstanding amount to the Commercial Tax Department within a specified period, with liberty granted to the department to initiate recovery proceedings if the payment was not made.
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