2021 (3) TMI 1075 - HC - VAT and Sales Tax

Request for waiver of interest on the interest free sales tax deferral amount availed by the appellant - Due date for repayment - Relevant date for calculation of such interest, is any - Section 24(3) of TNGST Act - HELD THAT - The interest would be payable from the due date for repayment of the loan and not from the date, on which, the IFST deferral loan was availed. What is the date, on which, the repayment is due? - HELD THAT - The Sales Tax Department did not appear before the Board on several dates when the case was heard. Be that as it may, the due date for repayment could have never occurred, in the facts and circumstances, between 01.8.2003 when the appellant was referred to the BIFR and 31.5.2006, the appellant was declared as a sick industrial company till its net worth turned positive and it was discharged from the Board on 05.2.2013 - the date, on which, the repayment became due for the appellant's case shall be fixed on 06.2.2013. Admittedly, the appellant cleared the entire sales tax on 25.4.2015. Hence, for the period from 06.2.2013 to 25.4.2015, the appellant is liable to pay interest. The benefit of G.O.Ms.No.1076 Industries (MIGI) dated 04.10.1988 cannot be straightaway made applicable to the appellant because it is a discretion vested with the Government and several factors are to be considered before discretion is exercised - Hence, for the present, we do not intend to make any observation with regard to the applicability of G.O.Ms.No.1076 Industries (MIGI) dated 04.10.1988 to the appellant's case. But, it is left open to the appellant to approach the Government, if so advised. The appeal is allowed in part.

Summary

Issues Involved:
1. Liability for payment of interest on the sales tax deferral amount.
2. Date from which the interest should be calculated.
3. Applicability of Government Orders for deferral concessions.
4. Right to waiver of interest based on the peculiar facts of the case.

Detailed Analysis:

1. Liability for Payment of Interest on the Sales Tax Deferral Amount:
The primary issue is whether the appellant is liable for payment of interest on the sales tax deferral amount availed under the Tamil Nadu General Sales Tax Act, 1959. The court held that the appellant is liable for interest as per Section 24(3) of the Act. The deferral agreement stated that in case of default, the appellant must repay the amount with interest. The learned Single Judge also held that there was no legal basis for a complete waiver of interest.

2. Date from Which the Interest Should be Calculated:
The court had to determine the date from which the interest should be calculated. It was noted that the deferral agreement had not been canceled by the Department, despite the appellant defaulting on the conditions. The court emphasized that a written order of cancellation is mandated by Clause 11 of the agreement, and principles of natural justice require a show cause notice to be issued. The appellant was declared a sick industrial company by the BIFR, and the net worth turned positive on 05.02.2013. The court concluded that the repayment became due on 06.02.2013, and the appellant cleared the dues on 25.04.2015. Therefore, the interest is payable from 06.02.2013 to 25.04.2015.

3. Applicability of Government Orders for Deferral Concessions:
The appellant sought to benefit from G.O.Ms.No.1076 Industries (MIGI) dated 04.10.1988, which grants deferral from payment of sales tax for a period of three years from the date of actual revival or from the date the BIFR declared the unit as sick. The court noted that the applicability of this Government Order is discretionary and several factors need to be considered. The court left it open for the appellant to approach the Government for this benefit.

4. Right to Waiver of Interest Based on the Peculiar Facts of the Case:
The appellant argued that no interest or penalty should be charged for the period when it was under the BIFR referral, as they were not allowed to make payments per BIFR guidelines. The court recognized the peculiar circumstances of the case, noting that the due date for repayment could not have occurred between 01.08.2003 (when the appellant was referred to BIFR) and 05.02.2013 (when the appellant was de-registered by BIFR). The court held that the appellant is liable for interest only from 06.02.2013 to 25.04.2015.

Conclusion:
The writ appeal is partly allowed, modifying the order and direction issued in the writ petition. The appellant is liable for interest from 06.02.2013 to 25.04.2015. The first respondent is to verify the computation of interest and issue a demand. The appellant is granted three months to remit the interest from the date the attachment is lifted. The appellant may make a representation to the Government to seek the benefit of G.O.Ms.No.1076 Industries (MIGI) dated 04.10.1988. This judgment is rendered on the peculiar facts and circumstances of the case and is not to be treated as a precedent for determining the date of repayment due. No costs.