2015 (4) TMI 1209 - HC - VAT and Sales Tax

Court directs reconsideration of settlement applications under Tamil Nadu Sales Tax Act

M/s. Nippon Enterprises (South) Versus The Joint Commissioner (CT), The Commercial Tax Officer

The court found the rejection of the applications under the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2010 unsustainable. It held that the ... Application for settlement of Samadhan Scheme - rejection on the ground that the petitioner had only remitted ₹ 5,33,369/- and ₹ 2,34,513/- along with Samadhan scheme application, which are below 90% of the tax payable under the scheme together with interest - Held that: - The reason given by the respondent while rejecting the applications filed by the petitioner, in my opinion, is not sustainable. It is not in dispute that by order dated 16.2.2010, the Appellate Deputy Commissioner has partly allowed the appeals filed by the petitioner as against the original assessment order, dated 30.10.2009. It is needless to mention that once the superior authority (Appellate Deputy Commissioner) passes an order, such order is binding on the lower authority (Assessing Officer) who function under the jurisdiction of such superior authority and the order of the Tribunal is binding upon the Appellate Deputy Commissioner and the Assessing Officer who function under the jurisdiction of the Tribunal. It is worthwhile to refer the decision of the Hon'ble Supreme Court, in Union of India v. Kamlakshi Finance Corpn. Ltd., [1991 (9) TMI 72 - SUPREME COURT OF INDIA] wherein, it has been held that the mere fact that the order of the appellate authority is not acceptable to the department in itself an objectionable phrase and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. It is not in dispute that as against the orders of the Appellate Deputy Commissioner, both the petitioner and the Government have preferred their appeals and since they are pending, as rightly contended by the respondents, the said appeals cannot be construed as withdrawn, however, for this reason, it is not justified to contend that since the appeals are pending before the Tribunal and the said proceedings have not reached a finality, the demand as per the original order has to be taken as the basic demand for consideration for the applications under Samadhan Scheme. The first respondent is directed to entertain the applications filed by the petitioner under Samadhan Scheme and pass necessary orders in accordance with law - petition allowed. Issues Involved:1. Rejection of applications under Section 6(3) of the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2010.2. Eligibility for settlement under the Samadhan Scheme.3. Calculation of tax liability and payment under the Samadhan Scheme.4. Impact of pending appeals on the settlement process.Detailed Analysis:1. Rejection of Applications under Section 6(3) of the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2010:The petitioner challenged the proceedings dated 1.8.2014, wherein the first respondent rejected the applications filed under Section 6(3) of the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2010 (the Act, 2010) for settlement of arrears. The first respondent held that the applications were not maintainable under Section 6(3) of the Act, 2010. The rejection was based on the fact that the petitioner had not included the demands relating to the relief granted by the Appellate Deputy Commissioner (CT) IV, Chennai, which was disputed by the department before the Tribunal.2. Eligibility for Settlement under the Samadhan Scheme:The Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2010 was introduced to settle arrears of tax, penalty, or interest. The petitioner, a dealer in printing materials and photographic goods, filed applications under this scheme for the assessment years 1991-92 and 1992-93. The scheme allowed settlement of arrears for assessments made before 1st April 2007, provided no appeal or revision was pending on the date of filing the application. The petitioner argued eligibility based on a notification extending the application deadline to 31.12.2010.3. Calculation of Tax Liability and Payment under the Samadhan Scheme:The petitioner filed applications for settlement based on the tax liability determined by the Appellate Deputy Commissioner's order dated 16.2.2010. The petitioner paid amounts totaling Rs. 5,33,369/- for 1991-92 and Rs. 2,34,513/- for 1992-93. However, the respondents contended that the demands as per the original assessment order dated 30.10.2009 should be considered for the settlement, as the appeals against the Appellate Deputy Commissioner's order were pending. The petitioner's payments fell below 90% of the tax and interest payable under Section 7 of the Act, leading to the rejection of the applications.4. Impact of Pending Appeals on the Settlement Process:The respondents argued that since the department's appeals against the Appellate Deputy Commissioner's order were pending before the Tribunal, the original assessment orders should be considered for calculating the settlement amount. The court, however, held that once the Appellate Deputy Commissioner passed an order, it superseded the original assessment orders unless stayed or set aside by the Tribunal. The Supreme Court in Union of India v. Kamlakshi Finance Corpn. Ltd. emphasized that orders of higher appellate authorities should be followed by subordinate authorities unless suspended by a competent court.Conclusion:The court found the respondents' reason for rejecting the applications unsustainable. It held that the Appellate Deputy Commissioner's order superseded the original assessment orders, and the pending appeals did not justify considering the original demands for the settlement calculation. The court set aside the impugned orders and directed the first respondent to entertain the petitioner's applications under the Samadhan Scheme and pass necessary orders within four weeks. It clarified that this order would not affect the pending appeal proceedings before the Tribunal, and the respondents could proceed afresh if they succeeded in the appeals.Order:The writ petitions were allowed, and the impugned orders were set aside. The first respondent was directed to entertain the applications filed under the Samadhan Scheme and pass necessary orders in accordance with law within four weeks. The order would not impact the pending appeal proceedings before the Tribunal, and the respondents could proceed afresh if they succeeded in the appeals. No costs were awarded.