2013 (4) TMI 557 - HC - VAT and Sales Tax

Non reporting of installation of additional number of spindles - Deferral scheme for payment of Sales Tax - rejecting the details furnished by assessee by the dept. & best judgment assessment was made with an additional tax levied together with penalty under Section 22(2) of the TNGST Act - petitioner contested that neither the Government Order nor the eligibility certificate as well as an agreement entered into with the Commercial Tax department stipulate any condition that whenever additional spindles were employed, the eligibility certificate will get amended - Held that - The purpose of the section is to grant the benefit to new industrial units to help them tide over the initial teething troubles and to sick industries to assist them to get over their sickness. To this end, the Government is empowered to defer the payment of the whole or any part of the tax payable in respect of any period. If on the other hand, the conditions are not satisfied, then too the State Government may allow the tax due to be repaid in instalments under Section 24(1) but in such a case the assessee would be liable to pay interest under Section 24(3) which provides on any amount remaining unpaid after the date specified for its payment as referred to in sub-section (1) or in the order permitting payment in instalments, the dealer or person shall pay, in addition to the amount due, interest at one-and-half per cent per month of such amount for the first three months of default and at two per cent per month of such amount for the subsequent period of default. Writ petitions are liable to be rejected as the petitioner has not availed the appellate remedy provided under the TNGST Act. The petitioner having got the eligibility certificate followed by an agreement had clearly breached the said agreement. Reliance placed by the petitioner in an unreported judgment which will have no relevance. . Thus the argument that installation of additional spindles will not be in violation of the eligibility certificate and the agreement does not stand to reason.

Summary

Issues:
Challenge to assessment orders under Tamil Nadu General Sales Tax Act for additional spindles engaged under IFST Scheme, failure to avail appellate remedy, breach of agreement, violation of eligibility certificate conditions.

Analysis:
1. Assessment Orders Challenge: The petitioner, a textile company, challenged assessment orders for additional spindles under IFST Scheme, alleging non-reporting and non-payment of tax on increased production. Best judgment assessment was made, additional tax and penalty imposed. Failure to avail appellate remedy within 30 days was noted.

2. Revised Notices Challenge: Subsequently, revised notices for extra spindles were challenged. The petitioner cited a division bench judgment, claiming actions were contrary. The subsequent writ petitions were grouped with the initial ones due to similar issues.

3. Grounds Raised: Petitioner argued that no condition in the eligibility certificate or agreement required amendment for additional spindles. Respondents allegedly ignored the division bench's decision.

4. Respondents' Contentions: Respondents contended that the petitioner breached the agreement by not reporting additional spindles or paying tax on increased production. The turnover for the base years did not support the increased production claim. Relied on a judgment regarding eligibility certificate conditions.

5. Eligibility Certificate & Agreement: The eligibility certificate allowed deferral of sales tax for nine years, subject to conditions. The agreement with the Commercial Tax department specified deferral conditions based on increased production.

6. Legal Issues: The court analyzed the petitioner's reliance on a judgment and the purpose of Section 17-A of the TNGST Act. The court noted that the petitioner's failure to avail appellate remedy and breach of the agreement led to dismissal of the writ petitions.

7. Judgment: The court dismissed all four writ petitions, citing failure to exhaust appellate remedy, breach of agreement, and distinguishable precedent. No costs were awarded, and connected petitions were closed.