Deferred sales tax recoverable under Revenue Recovery Act where scheme and agreement preserved recovery on default.

Deferred sales tax converted into an interest-free government loan under the deferral scheme remained recoverable through the Revenue Recovery Act because the assessee's agreement expressly provided for recovery on default in that manner. The scheme deemed the tax to have been paid and required execution of an agreement; reading both together, the liability did not cease to be enforceable merely because it was treated as a loan. The challenge that section 25 of the Revenue Recovery Act could not be used was rejected, and the recovery notice was upheld.

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Issues: Whether the authorities were justified in invoking section 25 of the Revenue Recovery Act to recover the deferred sales tax amount after it stood converted into a government loan under the deferral scheme and the agreement executed by the assessee.

Analysis: The deferral scheme treated the deferred sales tax as deemed to have been paid and the equivalent amount as an interest-free government loan, but the scheme itself required execution of an agreement. The agreement executed by the assessee specifically provided that on default, the government loan, tax and interest due thereon would be recoverable in the manner specified under the Revenue Recovery Act and under sections 24(2) and 26 of the TNGST Act. Reading the scheme and the agreement together, the amount remained recoverable as arrears in the prescribed recovery mechanism. The challenge that the amount had ceased to be tax and could not be proceeded against under the Revenue Recovery Act was therefore untenable.

Conclusion: The invocation of section 25 of the Revenue Recovery Act was valid and the recovery notice was sustainable, against the assessee.

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