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TMI Blog2014 (11) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner/applicant to produce the records. In such circumstances, an opportunity of personal hearing is inevitable and in fact the disputed question of facts can very well be thrashed out if the assessee is called upon by the designated authority to state as to how they computed the amount based on their books of accounts or records. Therefore, though the statute does not prohibit an opportunity of personal hearing while considering the application under Section 6(1), going by the scheme of the Act, there is no error on the part of the designated authority to afford an opportunity of personal hearing so as to ensure fairness and transparency in procedure and also to satisfy the cardinal rule, Audi alteram partem. In view of the above procedural defects, the impugned orders passed by the designated authority rejecting the petitioner's applications are liable to be set aside with a direction to the designated authority to re-consider the entire matter in terms of the scheme of the Act. - W.P.(MD) Nos.5638, 5639, 5640, 5641, 5642, 5643, 5644, 5645, 5646, 5647, 5648, 5649, 3940, 3941, 8409, 8410, 8411, 8412, 8413, 8414 & 8415 of 2014 , M.P.(MD) Nos.1 & 2 of 2014 in all W.Ps M.P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns under Section 16(D) of TNGST Act before the first respondent to be dealt with by the special committee for redressal of grievances for all the assessment years. Orders were passed on such applications being presented under Section 16(D) of the Act. Based on the proceedings of the special committee, the second respondent issued notice to the petitioner proposing to make assessment in terms of the orders passed by the special committee. 6. At the relevant time, the Government introduced a settlement scheme by enacting Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2011 (Act No.29/2011) (hereinafter, referred to as 'the Settlement Act'). The scheme provided for one time settlement of arrears subject to conditions. The petitioner opted to avail the benefit of the Settlement Act and submitted applications on 30.04.2012. These applications were pending for nearly two years and they were rejected by the first respondent by passing individual orders, which are impugned in one set of writ petitions in this batch of cases. 7. The entire batch of writ petitions fall under three categories. The first category of cases are filed challenging the order passed by the first resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D) Nos.16312 to 16314 of 2012, dated 01.07.2014. 10. It is further submitted that if this Court accepts the contention raised by the petitioner and the orders passed by the first respondent are interfered, then automatically the third category of cases have to be allowed, since those category of cases are challenging the order of assessment, which is a consequence to the rejection of applications filed under the provisions of the Settlement Act. 11. The next contention raised by the learned counsel is that interest could be levied only after completion of the assessment and the observation made by the first respondent in the impugned orders regarding levy of interest is illegal. In this regard, reliance was placed on the decision of the Honourable Supreme Court in the case of E.I.D Parry (I) Ltd. v. Asst. Commr. of C.T. (SC), reported in 2005 (141) STC 12. 12. It is further submitted that for two years, the settlement applications were kept pending before the first respondent and if the first respondent had afforded an opportunity of personal hearing to the petitioner and called for books of accounts and other records, the entire exercise could have been done in a proper m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is submitted that the petitioner had collected tax and admitted his liability in the monthly returns and in such cases the provisions of clauses (b) (c) of Section 7 would be applicable. 16. Further, it is submitted that the Settlement Act does not contemplate any defaulter to pay 40% of the admitted tax that too collected from their customers and kept with the defaulter for nine years under the deferral scheme Therefore, Section 7(b) was introduced in the case of tax due on enhancement of turnover and Section 7(c) in the case of tax due on the admitted tax as per returns and both sections should be conjointly considered for settlement of arrears under the Settlement Act. Further, it is submitted that there is no violation of principles of natural justice in passing the impugned orders and the applications were dealt with in accordance with Section 6 and there is no necessity for issuing any show-cause notice in terms of the Act. For all the above reasons, the learned Additional Government Pleader sought to sustain the impugned proceedings. 17. Heard the learned counsel for the parties and perused the materials placed on record. 18. Before we consider the factual and l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate authority or revisional authority under the relevant Act, before whom any proceeding or appeal or revision, as the case may be, is pending, within seven days from the date of making such application before the designated authority. 6. Determination of amount payable by the applicant. - (1) The designated authority shall verify the correctness of the particulars furnished in the application made under section 5 with reference to all relevant records and determine the amount payable at the rates specified in section 7. (2) The designated authority shall demand further amount payable by the applicant in the form prescribed, if the amount paid by the applicant along with application falls short of not more than ten per cent of the amount determined under sub-section (1). (3) If the applicant has not paid ninety per cent of the amount payable under section 7 along with the application, the designated authority shall summarily reject the application. (4) The amount determined under sub-section (1) shall be rounded off to the nearest rupee and, for this purpose, where such amount contains a part of a rupee, and, if such part is fifty paise or more, it shall be rounded of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f tax, which has been admitted as tax due as per the returns filed for the year with corresponding arrears of penalty and interest and Clause (d) relates to arrears of penalty or interest or both and where there is no corresponding arrears of tax pending collection on the date of application, the amount which the applicant has to pay under each of the clauses have been mentioned. 22. Therefore, the applicant, while submitting application under Section 5 has to calculate the amount payable as per the rates mentioned in Section 7(a) to (d) and remit the same and file proof of payment along with application. A separate application is required to be filed for each assessment. If any application or revision is pending, then the applicant has to forward the copy of the application to the said authority in terms of Section 5(3). Therefore, at the first instance, the onus lies on the dealer/applicant to determine the payment payable under Section 7. We have noticed that under Section 7, it is a rate applicable for determining the amount payable, which at the first instance is on the dealer/applicant. In terms of Section 6(1), the designated authority is bound to verify the correctness o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down the provision and the dealer/applicant cannot seek for reliefs beyond the scope of the scheme of the Settlement Act. 24. Apart from the above referred provisions, Section 8 of the Act deals with settlement of arrears and issuance of certificate. If the authority is satisfied about the payment of amount determined under Section 6(1), by an order, settle the arrears of tax, penalty or interest and issue a certificate in such form as may be prescribed, and thereupon the applicant shall be discharged from his liability or interest. In terms of sub-section (2) to Section 8, the designated authority, for reasons, to be recorded in writing, may refuse to settle the arrears of tax, penalty or interest and such orders shall be passed after giving reasonable opportunity to the applicant to show- cause against such refusal. In terms of sub-section (3) to Section 8, the authority notified by the Government may, at any time, within ninety days from the date of issuance of certificate under sub-section (1) of Section 8 by the designated authority, modify the certificate by rectifying any error apparent on the face of the record. Therefore, the applicant to be entitled to certificate und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 6(1), then and then alone the designated authority shall apply sub-section (2) to Section 6 for determining the further amount payable. In the impugned order, the designated authority took up the applications for scrutiny and stated that the computation made by the petitioner in both TNGST and CST cases was incorrect as they were required to pay not only 40% of the arrears of tax pending collection assessed on best of judgment due to non-production of accounts or non-filing of declaration, but also the arrears of tax admitted in their returns. Therefore, the designated authority was to consider the applications in the light of the returns filed by the petitioner, orders of assessment, other relevant records etc. Since the assessment itself was on best of judgment basis, the designated authority proceeded to calculate the amount payable at 40 + 7 + and 40 + 10% under TNGST Act and CST Act respectively and by calculating the figure based on the order of assessment stated that the amount paid by the applicant does not fall short of more than 10%, hence the applications cannot be considered. 28. In my view, the issue to be decided at the first instance is whether these application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by the designated authority rejecting the petitioner's applications are liable to be set aside with a direction to the designated authority to re-consider the entire matter in terms of the scheme of the Act. 31. As regards the levy of interest, it has to be pointed out that the Honourable Supreme Court in the case of E.I.D. Parry (I) Ltd. (cited supra) held as follows: .....Tamil Nadu General Sales Tax Act, 1959, then such a levy is different from the levy of interest, which is dependent on the discretion of the assessing officer. The default arising on non-payment of tax on an admitted liability in the case of self-assessment falls under section 24(3) read with rule 18(3), which attracts automatic levy of interest whereas the default in filing incomplete and incorrect return falls under rule 18(4) which attracts best judgment assessment in which the levy of interest is based on the adjudication by the assessing officer. Therefore, rule 18(3) and rule 18(4) operate in different spheres. 32. The above legal principle also should be taken into consideration by the first respondent while considering the applications afresh as it is a relevant fact while verifying ..... 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