Sales tax deferral interest waiver: absence of clear base-level payment condition justified sympathetic government consideration

A sales tax deferral scheme dispute concerned interest on belated payment of base level tax and whether waiver deserved sympathetic consideration. The Court noted that the earlier deferral certificates and agreements did not expressly require maintenance of base level payment, and no separate amendment or intimation was issued to impose that obligation after the later Government Order. Applying a purposive construction, it balanced industrial incentive objectives against the State's revenue interest and found that the assessee's bona fide doubt and the absence of a clear stipulation justified positive consideration of waiver by the Government. The assessee was allowed to seek waiver before the Commercial Taxes Department, with no coercive action meanwhile.

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Issues: Whether interest demanded on belated payment of base level tax under the sales tax deferral scheme was liable to be interfered with, and whether the assessee was entitled to a sympathetic consideration for waiver of such interest.

Analysis: The deferral certificates and agreements for the earlier expansion units did not expressly stipulate maintenance of base level payment, and no separate intimation or amendment was issued to impose such a requirement even after the later Government Order. The Court applied a purposive construction to the deferral scheme, noting that while the scheme was intended to encourage industrial development in backward areas, it also had to preserve the State's revenue flow from existing units. In view of the assessee's bona fide doubt, the absence of clear stipulation, and the statutory power enabling remission or waiver of tax-related liabilities, the Court held that the request for waiver of interest deserved positive consideration by the Government.

Conclusion: The demand was not quashed outright, but the assessee was permitted to seek waiver of the interest before the Secretary to Government, Commercial Taxes Department, who was directed to consider the request positively and sympathetically, with no coercive action meanwhile.

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