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TMI Blog2020 (2) TMI 1112X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1959, no interest is attracted under Section 24(3) of the Act during the deferral period, provided the condition laid down for payment of tax deferred are satisfied. A plain reading of Section 17A(2) of Tamil Nadu General Sales Tax Act, 1959 would indicate that petitioner is not entitled to waiver of interest even for the period during the deferral period as the petitioner breached the condition of the deferral agreement by not paying the tax in time as agreed - In this case, admittedly, the petitioner has not satisfied the condition for payment for deferred payment of tax and therefore interest is payable by the petitioner after the specified date. There is no basis on which the interest liability can be waived. The interest liability which could be waived by the respondent would have been be only in terms of 17-A (2) of the Tamil Nadu General Sales Tax Act, 1959 read with the Agreement. Thus at best the tax liability can be deferred. There is no power vested with the respondent to waive interest payable under Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 - Only when the assessing officer comes to a conclusion that the tax determined and payable by a dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree Sales Tax Deferral Amount as provided under Section 17-A (2) of the Tamil Nadu General Sales Tax Act, 1959. 4. The short point that arises for consideration in the present Writ Petition is whether in the facts and circumstances of the case the petitioner is entitled for waiver from payment of interest over and above the waiver of interest already availed and allowed statutorily under an agreement signed under Section 17-A (2) of the Tamil Nadu General Sales Tax Act, 1959 on the ground that the petitioner became a sick industrial unit within the meaning of the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 by the time when it was required to discharge the tax liability under the agreement? 5. The petitioner was sanctioned an Interest Free Sales Tax (IFST) Deferral amount by the Government of Tamil Nadu for a sum of ₹ 517.5 lakhs. The petitioner signed an IFST Deferral Agreement dated 08.09.2000 with SIPCOT the competent authority designated for the aforesaid purpose. Copy of the Interest Free Sale Tax (IFST) Deferral Agreement is not before this Court. 6. It is submitted that as per the agreement, the deferral period was effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, by an order dated 22.12.2014, this court had directed the petitioner to pay the principal tax amount of ₹ 74,51,160/- either in one lumpsum or in installment on or before 30.4.2015 and subject to such compliance further recovery proceedings were stayed. 14. However, it appears the petitioner failed to comply with the order in time, though the petitioner claims to have remitted an amount of ₹ 74,51,160/- on 24.04.2015. There is however no proof of such payment. 15. Thereafter, by an order dated 07.01.2016 and 16.02.2016, the petitioner was directed to deposit the balance amount as well. It appears, an undertaking was also given by the petitioner that it was willing to deposit entire amount of ₹ 2,21,95,701/- by way of fixed deposit in the name of the 1st respondent till the disposal of the petition. This undertaking was recorded in the order passed on 16.02.2016. 16. However, neither the said undertaking was complied by the petitioner nor the respondents have taken further recovery proceedings perhaps due to the pendency of the present writ petition. 17. Be that as it may, I shall now deal with the merits and demerits of case for final dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said Act prevailed over the tax liability and the interest liability under the provisions of the Tamil Nadu General Sales Tax Act, 1959. 25. In this connection, reference was made to the decision of the Hon ble Supreme Court in TATA Davy Ltd Vs. State of Orissa, (1997) SCC 669. 26. The learned Senior Counsel for the petitioner also referred to the decision of the Hon ble Supreme Court rendered in Gram Panchayat and Another Vs. Shree Vallabh Glass works Ltd, (1990) 2 SCC 440, wherein it was held that during the pending of the proceedings under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985, recovery of dues stands suspended and for computation of the period of limitation for recovering the dues also stood excluded during the BIFR proceeding. 27. A reference was also made to the decision of the Hon ble Supreme Court in K.S.L and Industries Ltd. Vs. Arihand Threads and Others, (2015) 15 SCC 166,to the effect that the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 will prevail over the provision of the Tamil Nadu General Sales Tax Act, 1959. 28. The learned Senior Counsel for the petitioner al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trial Companies (Special Provisions) Act, 1985. After the petitioner was deregistered, respondents have legitimately initiated recovery proceedings. 34. Since the petitioner failed to discharge tax liability from the due date, the respondents have demanded tax and interest for the entire periods as if there was no IFST Deferral given to the petitioner. 35. I have considered the arguments advanced by the learned Senior Counsel for the petitioner and the learned Government Advocate for the respondents. I have also perused the records of the case. 36. Interest Free Sale TCA Deferral Scheme is a special scheme prescribed under Section 17-A of the Tamil Nadu General Sales Tax Act, 1959. Under the said provision, the Government may, by a notification defer the payment of the whole or any part of the tax payable in respect of any period of any new industrial unit or sick unit or sick textile mill. Interest Free Deferral of Sales Tax may be given prospectively or retrospectively. It is however to subject to such conditions as may prescribed which are incorporated in the Deferral Agreement. 37. As per sub-section 2 to Section 17-A of the Tamil Nadu General Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half percent per month of each month for 3 months of default and 2% per month of such among for the subsequent period of default. Even where a dealer who files to pay tax is liable to pay interest at 2% of the tax payable for every month or part thereof after the expiry of the period specified for its payment. 41. Under Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 interest is attracted if the amount remains unpaid after the specified date for its payment under sub-section (1) or any order permitting payment in installment remains unpaid. 42. To allow any other interpretation would amount to rewriting the mandate of Section 17 (2) of the Tamil Nadu General Sales Tax Act, 1959 and the express terms of the deferral agreement which is not intended. In my view, no other interpretation is permissible. 43. The submission of the petitioner that the petitioner should is entitled for further waiver of interest because it became a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 is without any basis. 44. Any concession or modification of the terms of the deferral agreement if any, should have been worked out by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch period as may be prescribed. For this purpose, such dealers required to furnish a return showing actual turnover for each month or other as may be prescribed and pay tax on the basis of such returns. Thus, tax under this Section due without any notice of demand to the dealer on the date of receipt of the return or on the last date as may be prescribed whichever is later. 52. Advance tax to be paid under section 13(2) is on the basis of actual turnover for each month and shall be paid without a notice of demand and in default of such payment the whole of the amount outstanding on the date of default shall become immediately due and shall be a charge on the properties of the person or persons liable to pay tax or interest under the Act. In default, the property of the person or persons liable to pay tax or interest will be a charge in the name of the commercial tax department. 53. Only when the assessing officer comes to a conclusion that the tax determined and payable by a dealer was less or the return was incomplete or where no returns were filed, a notice under section 13(2) of the Tamil Nadu Gen Sales Tax Act, 1959 is required to be issued to a registered dealer. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of tax, a dealer can be asked to pay tax . If not assessment order will accept the tax paid and shown the sales tax return. 61. The decision of the Hon ble Supreme Court in E.I.D. Parry (India) Ltd. Vs. Asst. Commissioner of Commercial Taxes, Chennai , (2005) 4 SCC 779, in my view is not applicable to the facts and circumstances of the present case . 62. There, the Supreme Court held that 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. The Honourable Supreme Court t further held that, Rule 18(3) and Rule 18(4) operate in different spheres. 63. In Krishna Smelters Ltd. V. Joint Commissioner (2017) SCC Online Mad 24310, this Court referred to the decision of the Division Bench of this Court in Amutha Mills Private Limited Vs. Assistant Commissioner (CT), and two others , in W.A.No.1482 of 2006, dated 06.12.2006 wherein it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.12.2013 is of no avail. 66. G.O.Ms.No.1076 Industries (MIGI) dated 04.10.1988, deferred the payment of Sales Tax for three years from the date of actual revival of the unit or the date from which Board for Industrial and Financial Reconstruction declared the unit as sick, whichever is later. 67. As per G.O.Ms.No191 Industries (MIGI) dated 20.05.1992, the Government extended deferment in deserving cases of the payment of sales tax upto a period of five years from the date of commencement of rehabilitation of the unit or the date from which the Board for Industrial and Financial Reconstruction declares the unit as sick, whichever is later, after examining each case on merits and also after taking into consideration the factors like power consumption employment, etc. 68. In respect of defunct industrial units which were not under the purview of Board for Industrial and Financial Reconstruction, the SIPCOT Vide letter dated 13.4.1993 of the Chairman Managing Director, SIPCOT LtLtr.No.ID/ST/BVVPIPL/93 has extended rehabilitation measures under RSR Scheme of Industrial Development Bank of India or initiate action under S.F.C Act and to bring about a change in the manag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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