2023 (6) TMI 1150 - HC - VAT and Sales Tax

Rejection of request of the appellants/writ petitioners for waiver of tax arrears and penalty - HELD THAT - As the Assessee has decided to go before the Authority, the Assessee, as a matter of right cannot demand that the entire waiver shall be granted. The Authority has the power either to waive or reject the waiver in its entirety and he also has the power to demand a higher perccentage as an interim measure till the issue is finally decided. In case, the Authority concerned accepts the case of the Assessee, the excess amount, if any collected will have to be refunded to the Assessee. The Authority, while passing a final order can either accept 4% or 12.5%, depending upon the acceptance of the contentions of the parties, but cannot increase the percentage from 4% or reduce it from 12.5%. The order of the learned Single Judge need not be interfered with, since the entire issue is at large and the issue has to be decided on merits, in order to give a quietus to the entire issue and the matter being pending before the authorities, as an interim measure, the respective appellants can be directed to pay another 4% of the tax. Accordingly, the respective appellants are directed to pay 4% of the tax determined by the authorities, apart from 4% already remitted, i.e., Total 8% (4% 4%) within a period of four weeks from the date of receipt of a copy of this order - the matter is remitted back to the authority concerned for passing appropriate orders on merits and in accordance with law.

Summary

Issues:
1. Challenge to order rejecting waiver of tax arrears and penalty.
2. Interpretation of tax rates under TNVAT Act for Drilling Rigs.
3. Applicability of Commissioner's clarification on tax rate determination.
4. Validity of rejection of waiver applications by Departmental Authorities.

Issue 1: The appellants challenged the order rejecting waiver of tax arrears and penalty, which stemmed from earlier writ petitions filed against assessment orders. The Division Bench granted status quo on tax recovery, remitting the matter back to the Commissioner of Commercial Taxes for reevaluation under Section 48A of the TNVAT Act. The Commissioner's subsequent clarification on tax rates led to the dismissal of the writ petitions and the filing of fresh applications seeking waiver.

Issue 2: The Division Bench's order highlighted the question of whether Drilling Rigs sold and mounted on Truck Chassis should be taxed at 4% as 'Tools' or 12.5% as 'Components of a Motor Vehicle' under TNVAT Act. The Court found both views taken by the Commissioner and assessing authority unsustainable, leaning towards considering the Rigs as Machinery and Equipments. The matter was referred back to the Commissioner for a fresh decision after hearing both parties.

Issue 3: The Commissioner's clarification held that the manufacture of Water Borehole Drilling Rigs mounted on Chassis is taxable at 12.5% or 14.5% under specific entries, contradicting the earlier interpretation. This led to the set aside of the Single Judge's order and the appellants were given options to challenge the clarification, which they pursued by approaching Departmental Authorities for waiver, subsequently rejected based on the Commissioner's opinion.

Issue 4: The Single Judge dismissed the writ petitions challenging the rejection of waiver applications, emphasizing the binding nature of the Commissioner's clarification on assessing authorities. The Court upheld the Authority's discretion in granting waivers and directed the appellants to pay an additional 4% tax as an interim measure, pending final determination by the authorities. The matter was remitted back to the concerned authority for further proceedings in accordance with the law.