Instalment payment of tax arrears with statutory interest was sustained despite coercive recovery proceedings under the tax statute.

Section 42 of the Tamil Nadu Value Added Tax Act, 2006 permits the assessing authority to allow tax arrears to be paid in instalments, subject to interest at 2% per month during the period of default. The provision also authorises recovery of arrears as land revenue and includes safeguards where property transfers are used to defeat revenue recovery. On this statutory framework, coercive recovery proceedings were justified because the assessee had collected tax but failed to remit it within time, yet the conditional instalment order was consistent with the Act and was sustained.

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Issues: Whether the assessee could be permitted to pay the tax arrears in instalments and whether the coercive recovery proceedings were liable to be interfered with.

Analysis: Section 42 of the Tamil Nadu Value Added Tax Act, 2006 governs payment and recovery of tax and permits the assessing authority to allow payment in instalments, while also mandating interest at 2% per month for the period of default. The Act also enables recovery of arrears as land revenue and contains safeguards against transfer of property to defeat revenue. Since the assessee had collected tax and failed to remit it within the prescribed time, recovery proceedings were justified. At the same time, the statutory scheme itself contemplated instalment payment subject to interest, and the conditional order of the Single Judge was consistent with that framework.

Conclusion: The order permitting payment in instalments was upheld and the challenge to the recovery proceedings failed.

Final Conclusion: The statutory scheme under Section 42 supports instalment-based payment of tax arrears subject to interest, and no interference was warranted with the discretionary relief granted.

Ratio Decidendi: Where the tax statute expressly permits payment of arrears in instalments subject to statutory interest, a court may sustain a conditional instalment order even in the face of coercive recovery proceedings.

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