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TMI Blog2007 (10) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... 59,40360 of 2002 - - - Dated:- 4-10-2007 - RAVIRAJA PANDIAN K. AND CHITRA VENKATARAMAN , JJ. ORDER:- The order of the court was made by Mrs. CHITRA VENKATARAMAN J. The writ petitions are filed against the orders of the Tribunal herein for quashing the order demanding interest on the ground that the assessee had paid the base level sales tax belatedly while availing the benefit of deferral of sales tax. Admittedly, the deferral of sales tax was granted to the petitioner in respect of three expansion units on different dates, the first of the two fell under consideration under G.O. Ms. No. 500 Industries (MIG II) Department dated May 14, 1990 and that of the third unit was granted on October 6, 1994 under G.O. Ms. No. 119, Commercial Taxes and Religious Endowments Department dated April 13, 1994. It was pointed out by the third respondent that the assessee had not maintained the payment on base level sale figure as per G.O. Ms. No. 119, Commercial Taxes and Religious Endowments Department dated April 13, 1994. Hence, the petitioner herein was liable to pay the tax to the tune of Rs. 27 lakhs. Faced with the threat of recovery, the assessee remitted a sum of Rs. 20 lak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility was granted by T.I.I.C. vide its proceedings dated May 7, 1992 for a sum of Rs. 13.01 lakhs for the period March 5, 1992 to March 4, 2001, repayable from the assessment year 2001-02 to 2009-10. Accordingly, the assessee entered into a written agreement with the third respondent on June 4, 1992. The assessee filed an amendment petition on June 21, 1993 before the T.I.I.C. to amend the certificate dated May 7, 1992. The amended certificate was accordingly issued on October 4, 1993 by including the additional investment by enhancing the deferral amount by 4.31 lakhs. Thus the total deferral of sales tax of Rs. 17.32 lakhs was for the period 1991-92 to 2000-01, repayable from 2000-01 to 2009-10. The third respondent accordingly entered into an agreement on January 30, 1994. As regards the second expansion unit, the petitioner herein obtained an eligibility of deferral of sales tax on October 6, 1994 for a total amount not exceeding Rs. 12.33 lakhs. The deferral period was to start from 1994-95 to April 1, 2003 to April 30, 2003. The repayment schedule was to start from 2003-04 to April 1, 2012 to April 30, 2012. In terms of this, eligibility agreement was entered into betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as eligible for deferral. The petitioner also replied by another letter dated October 7, 1997, enclosing the working. It stated that the highest sales before availing the deferral was Rs. 2.64 lakhs and the average highest sale would be Rs. 31.68 lakhs. It was also stated that they had worked out the base level payment and the deferral available and hence, again reiterated the request for payment in 20 monthly instalments. It is seen from the paper book produced before this court that on December 23, 1997, the Commercial Tax Officer, second respondent herein, issued a garnishee proceedings to the Bank of India, Chennai Main Branch, to which the petitioner replied on December 26, 1997, indicating the extent of deferral availed by them. They stated that one of the conditions given in G.O. Ms. No. 500 Industries (MIG-II) Department dated May 14, 1990 was that the deferral/waiver was only available for the goods manufactured using additional capacity by way of expansion. Considering the nature of manufacturing activity, the petitioner stated that it was not easily ascertainable from the books the exact quantum in metric tonnes of the goods produced after expansion. The petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irected the respondent to re-work the outstanding amount and issue fresh notice. Accordingly, the excess availment was re-worked. For the delayed payment of the excess amount, penal interest under section 24(3) of the Tamil Nadu General Sales Tax Act, 1959, was levied. The Tribunal held that the levy of penal interest was in order. Consequently, the original petitions were dismissed. Aggrieved of the said order, the petitioner has preferred the present writ petition before this court. Learned counsel appearing for the petitioner submitted that the units of the petitioner were set up well before the date of G.O. Ms. No. 119, Commercial Taxes and Religious Endowments Department dated April 13, 1994, which is prospective in nature. He submitted that this court, in W.A. No. 509 of 1994 by judgment dated February 22, 1995, was pleased to hold that the notification was prospective and applicable to those industries set up after the publication of the said notification. He referred to the clarification of the Special Commissioner dated June 21, 1995 which showed that the department had accepted the decision in W.A. No. 509 of 1994. When the assessee had commenced production as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment dated April 13, 1994, the question that remains for consideration is, whether the assessee has to be mulcted with liability to pay interest in this case. It is no doubt true that the principles governing the granting of deferral is with a view to encourage setting up of industries in backward and most backward areas notified under the Government Order. Having allowed the assessee to enjoy the benefit of deferral as per G.O. Ms. No. 500 Industries (MIG-II) Department dated May 14, 1990, when the certificate of eligibility or the agreement did not specify the minimum payment on the base level production, is there a default in not paying on the base level production/ sales? Admittedly, the assessee was not put on notice as regards the base level payment of tax, even subsequent to the passing of G.O. Ms. No. 119 Commercial Taxes and Religious Endowments Department dated April 13, 1994, either in the form of an intimation amending the agreement originally entered into in respect of the first units, or was there an intimation to the assessee to maintain the base level payment as per G.O. Ms. No. 119 Commercial Taxes and Religious Endowments Department dated April 13, 1994. Nor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e passing of G.O. Ms. No. 119 dated April 13, 1994 would not come under the said Government Order. Consequently, the liability has to be fixed as per G.O. Ms. No. 500 Industries (MIG-II) Department dated May 14, 1990. Admittedly, the assessee herein had its third unit set up subsequent to the passing of G.O. Ms. No. 119 dated April 13, 1994 and the other two units were prior to the passing of G.O. Ms. No. 119 dated April 13, 1994. Hence, taking note of the payment made by the assessee and the decision of this court in W. A. No. 509 of 1994 dated February 22, 1995 referred to above, and having regard to the conduct of the assessee in having a bona fide doubt as regards maintaining the base level payment, this court considers that in the interest of justice, the plea of the assessee merits consideration sympathetically by the Revenue. Learned counsel for the assessee pointed out to the power of the Government to grant waiver as regards the interest payable on the amount due. Section 16B of the Tamil Nadu General Sales Tax Act, 1959, refers to the power to reduce or waive penalty in certain cases by the Commissioner of Commercial Taxes. Section 17 deals with the power to notify exe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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