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Court rules in favor of petitioner on interest dispute in deferral agreement case, sets aside impugned order. The court set aside the impugned order demanding interest on the cancellation of a deferral agreement, ruling in favor of the petitioner. The court held ...
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Court rules in favor of petitioner on interest dispute in deferral agreement case, sets aside impugned order.
The court set aside the impugned order demanding interest on the cancellation of a deferral agreement, ruling in favor of the petitioner. The court held that the petitioner was entitled to pay interest only from the date of cancellation till the date of full payment, as per a decision of the Tamil Nadu Taxation Special Tribunal. The matter was remanded to the 1st respondent for levying interest for the specified period, with the petitioner instructed to settle the demanded amount within 15 days. The writ petition was allowed with no costs, and the connected miscellaneous petition was closed.
Issues: Impugned order demanding interest on cancellation of deferral agreement.
Analysis: The petitioner challenged an order by the 1st respondent demanding interest on the cancellation of a deferral agreement with the 3rd respondent. The petitioner availed deferral of &8377; 28.67 lakhs, but the agreement was canceled due to violation of conditions. The petitioner made partial payment of sales tax dues before the cancellation and cleared the remaining balance within the original deferral period. The 1st respondent demanded interest for the entire period, which was objected by the petitioner. The petitioner relied on a decision of the Tamil Nadu Taxation Special Tribunal, where it was held that interest is payable from the date of cancellation till full payment. However, the 1st respondent refused to follow this decision, stating a difference in circumstances.
The court found the 1st respondent's reasoning incorrect and held that the legal principle laid down by the Tribunal should have been considered. As the Tribunal's decision was final and unchallenged, the petitioner was entitled to the benefit of paying interest only from the date of cancellation till the date of full payment. Therefore, the impugned order was set aside, and the matter was remanded to the 1st respondent to levy interest for the specified period. The petitioner was directed to settle the demanded amount within 15 days from receipt.
In conclusion, the writ petition was allowed with no costs, and the connected miscellaneous petition was closed.
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