2014 (9) TMI 72 - HC - VAT and Sales Tax

Rejection of the application under Samadhan Scheme - balance of the admitted tax payable by the appellant was more than 10% - Whether the appellant is entitled to avail the Samadhan Scheme as per the provisions of the Tamil Nadu Sales Tax (Settlement and Arrears) Act, 2011 - Held that - As per Rule 3(5) of the Rules, if the designated authority finds any defect or omission in the applications, he shall return such applications for rectification of the defects within ten days from the date of receipt of the said application. However, in the case on hand, the first respondent, did not do so, but, without considering the said provision, had passed the impugned order and the learned Judge had also confirmed the same. Admittedly, the appellant, on verification of the records, found that it had inadvertently reported the turnover as inter-state sale and hence, the appellant had also filed an appeal before the authority concerned. It is the specific plea of the appellant that had the appellant been provided with an opportunity to rectify the defects in the taxable turnover reported, the appellant would be in a position to show that the balance of the admitted tax payable should be within 10%. Though the appellant was denied to rectify the same, the learned Judge had not considered the same and rejected the writ petition, which, in our opinion, warrants interference - Decided in favour of assessee.

Summary

Issues:
Challenge to order passed by learned Judge in W.P(MD)No.14335 of 2012 - Rejection of Samadhan Scheme application by first respondent under Tamil Nadu Sales Tax (Settlement and Arrears) Act, 2011.

Detailed Analysis:

Issue 1: Rejection of Samadhan Scheme Application
- The appellant, engaged in Timber business, reported taxable turnover for 2002-2003 as Rs. 47,87,674, with a tax payable of Rs. 1,91,507 and a penalty of Rs. 2,87,260.
- Appellant disputed the assessment order and filed an appeal, pending at the time.
- The State introduced the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2011 with an OTS Scheme to expedite arrears settlement.
- The first respondent rejected the Samadhan application by the appellant for not paying 90% of the amount payable under Section 7 of the Act.
- Appellant claimed the rejection was against the scheme's objective and filed a writ petition challenging the rejection.
- The learned Judge upheld the rejection, stating the designated authority rightfully rejected the claim due to the balance payable exceeding 10%.
- Appellant contended the rejection was without issuing a show cause notice and defeated the scheme's purpose.
- The respondents argued the rejection was valid as the appellant failed to comply with the condition precedent.
- The Court examined the Act's provisions, specifically Section 6 and Section 7, outlining the determination of payable amounts and rates applicable for settlement.
- Rule 3(5) of the Rules required returning applications for rectification of defects within ten days, which was not done in this case.
- The Court found the appellant should have been given an opportunity to rectify reported turnover errors to potentially meet the 10% threshold.
- The learned Judge's order was set aside as it did not consider the appellant's plea for rectification, warranting interference.
- The writ appeal was allowed, setting aside the learned Judge's order and directing the appellant to produce relevant documents for reconsideration within two weeks.

This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive understanding of the rejection of the Samadhan Scheme application under the Tamil Nadu Sales Tax (Settlement and Arrears) Act, 2011.