2018 (10) TMI 385 - HC - VAT and Sales Tax

Interest with reference to Section 24(3) of the TNGST Act - petitioner calculated interest from 02.07.2009 ie. the date on which the revision order was passed while the interest ought to have been paid from the date of original assessment order ie., from 28.11.1997 - petitioner is now ready to pay the balance amount of interest ie., ₹ 48,179/- as claimed by the first respondent - reasonable opportunity as contemplated under Section 8(2) of the Samadhan Act not provided. Held that - The proviso to Section 8(2) of the Samadhan Act clearly provides that no order under this Section shall be passed without giving the applicant a reasonable opportunity of showing cause against such refusal - But, in this case, as rightly stated by the learned counsel for the petitioner, the first respondent has failed to provide a reasonable opportunity to the petitioner before rejecting his application. Considering the fact that it is a beneficial legislation and the application filed by the petitioner by paying 1/3rd amount has already been accepted by the respondents and the impugned order has been passed without giving a reasonable opportunity to the petitioner and now the petitioner is ready to pay the balance interest amount of ₹ 48,179/-, this Court is inclined to set aside the impugned order, dated 26.08.2010 and accordingly, the same is set aside - petitioner is directed to pay the balance interest amount of ₹ 48,179/- within a period of two weeks from the date of receipt of a copy of this order and on receipt of the same, the first respondent is directed to take up the application filed by the petitioner under the Samadhan Act for the assessment year 1995-96 (TNGST) and dispose of the same within a period of four weeks thereafter. Petition allowed.

Summary

Issues:
1. Tax liability on receipts under "Hank Yarn Obligation" for assessment year 1995-96.
2. Refund of disputed tax amount after appeal.
3. Application under the Tamil Nadu Sales Tax (Settlement of Arrears of Act, 2008) - calculation of interest and rejection of application.
4. Violation of principles of natural justice in rejecting the application.
5. Interpretation of provisions of the Samadhan Act and the TNGST Act.
6. Compliance with the Samadhan Act in terms of payment and procedure.
7. Judicial review of the impugned order and setting aside the same.

Analysis:
1. The petitioner, a Textile Mill, contested the tax liability on receipts under "Hank Yarn Obligation" for the assessment year 1995-96. The assessing authority had levied tax, surcharge, additional sales tax, and a penalty. The first appellate authority allowed the appeal, directing the refund of the amount paid. Subsequently, the State filed a second appeal, which was also dismissed. A Tax Revision Case was then filed, leading to an order directing the petitioner to pay a revised amount.

2. The State enacted the Samadhan Act, under which the petitioner applied for relief by paying a portion of the tax, surcharge, additional sales tax, and interest. However, the application was rejected by the first respondent, citing incorrect calculation of interest and failure to pay the full amount. The petitioner challenged this rejection, alleging a lack of opportunity and violation of natural justice.

3. The court noted that the petitioner had paid the demanded tax during the appeal and had applied under the Samadhan Act after the revision order. The rejection of the application was based on outstanding penal interest calculated from the original order date. The petitioner offered to pay the remaining interest amount as demanded.

4. The court observed that the first respondent failed to provide a reasonable opportunity to the petitioner before rejecting the application, contrary to the provisions of the Samadhan Act. Despite the respondent's claim of non-payment of 90% of the amount, records indicated compliance with Section 7 of the Act. The court emphasized the beneficial nature of the legislation and the petitioner's readiness to pay the balance interest.

5. Consequently, the court set aside the impugned order, directing the petitioner to pay the balance interest amount within two weeks. The first respondent was instructed to review the petitioner's application under the Samadhan Act for the assessment year promptly. The writ petition was allowed without costs, and connected miscellaneous petitions were closed.