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2014 (7) TMI 579 - HC - VAT and Sales TaxLevy of penalty and interest when there was no charging section - Rejection of application under Samadhan Scheme - Bar of limitation - Maintainability of appeal - Held that - The Period of limitation has been provided under the Act for the assessees to prefer or avail the statutory remedies under the Act and not for a Writ Petition under Article 226 of the Constitution of India - Any levy of tax including interest or penalty under any taxing statute must be in consonance with the Act. Therefore, any claim questioning the jurisdiction of the authority to levy tax can be raised by way of a Writ Petition de hors the availability of alternative remedy, as it is only a self-imposed restriction of the Courts. In the present case, considering that the locus standi of the respondents to demand interest on Additional Sales Tax and penalty is questioned, the Writ Petition is held to be maintainable. During the relevant assessment year, there was no provision to levy interest on belated payment of additional tax or in other words, there was no provision enabling the applicability of Section 24(3) towards tax due, under the Act - interest cannot be demanded for belated payment on Additional Sales Tax, as there is no substantial provision in the TNAST Act itself and similarly, no penalty can be levied, as there is no charging Section under the TNAST Act to levy penalty for the relevant Assessment year. The provisions of the TNGST Act cannot be extracted or read upon for the purpose of levy of interest or penalty under the TNAST Act. The validating Acts are applicable only to the assessment under TNGST Act. Further, in view of the bar under Article 265 on the state, the question of waiver is not applicable to a taxing statute - proceedings of the first respondent, dated 26.04.2004, confirmed by the proceedings of the second respondent, dated 12.09.2008, are set aside insofar as the levy and demand of interest of ₹ 2,09,700/- and ₹ 5,39,532/- towards penalty on the additional sales tax payable by the petitioner - Decided in favour of assessee.
Issues Involved:
1. Challenge to the rejection of the application under the Samadhan Scheme. 2. Levy of interest and penalty on Additional Sales Tax for the assessment year 1984-1985. 3. Maintainability of the Writ Petition under Article 226 of the Constitution of India. Issue-wise Detailed Analysis: 1. Challenge to the rejection of the application under the Samadhan Scheme: The petitioner filed W.P.(MD).No.5111 of 2009 challenging the rejection of his application under the Samadhan Scheme by the second respondent. The petitioner argued that the amount paid as per the court's direction should be considered sufficient compliance under Section 7 of the Settlement of Arrears Act, 2008. The second respondent rejected the application, stating that the petitioner had not tendered 25% of the amount as required by Section 7(d) of the Act. The court noted that the petitioner's application was rejected without providing an opportunity to be heard, which violated principles of natural justice. 2. Levy of interest and penalty on Additional Sales Tax for the assessment year 1984-1985: The petitioner challenged the levy of interest and penalty on Additional Sales Tax, arguing that there was no provision in the Tamil Nadu Additional Sales Tax Act, 1970, enabling the levy of interest and penalty for the relevant assessment year. The court examined various judgments, including Sumangalam Steels Pvt., Ltd vs. State of Tamil Nadu, Eastern Electrics vs. State of Tamil Nadu, and Tvl. Karthik Roller Floor Mills Pvt., Ltd vs. State of Tamil Nadu, which established that the Additional Sales Tax Act is an independent statute and does not incorporate provisions of the Tamil Nadu General Sales Tax Act for the levy of interest and penalty. The court concluded that there was no substantive provision in the Additional Sales Tax Act for levying interest and penalty for the relevant assessment year. 3. Maintainability of the Writ Petition under Article 226 of the Constitution of India: The respondents argued that the petitioner had not availed the alternative remedy and that the petition was filed after the period of limitation. The court held that the right to levy tax is governed by Article 265 of the Constitution of India, which mandates that no tax shall be levied or collected except by authority of law. The court stated that claims questioning the jurisdiction of the authority to levy tax can be raised by way of a Writ Petition, irrespective of the availability of alternative remedies. Consequently, the court found the Writ Petition to be maintainable. Conclusion: The court set aside the proceedings of the first respondent dated 26.04.2004 and the second respondent dated 12.09.2008, insofar as they demanded interest and penalty on Additional Sales Tax, directing the respondents to pass fresh orders providing appropriate relief. As the levy of interest and penalty was set aside, the court found no necessity to pass further orders in W.P.(MD).No.5111 of 2009. Consequently, W.P.(MD).No.5112 of 2009 was allowed, and W.P.(MD).No.5111 of 2009 was closed.
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