Postponed interest liability and liberal settlement scheme construction governed eligibility under Tamil Nadu sales tax arrears relief.
Interest under Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 was held to be only postponed during pendency of the appeal or revision and not extinguished, because the second proviso defers liability until final disposal and recalculation after the final order. The Court also held that eligibility for settlement under the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2008 depended on an assessment made before 01.04.2002 and the absence of any pending appeal or revision on the date of application; subsequent remand or fresh demand did not defeat the scheme. As beneficial legislation, the settlement scheme required liberal construction, and the rejection orders were set aside.
Issues: (i) Whether interest under Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 stood merely postponed during pendency of the appeal or revision and could not be treated as extinguished; (ii) Whether the petitioner was eligible for settlement under the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2008 when the original assessment related to a period prior to 01.04.2002 and the appeals were withdrawn before making the application.
Issue (i): Whether interest under Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 stood merely postponed during pendency of the appeal or revision and could not be treated as extinguished.
Analysis: The second proviso to Section 24(3) postpones interest payable on disputed tax until disposal of the appeal or revision and requires recalculation only after the final order. The revisional authority had set aside the levy as premature and remanded the matter, which showed that the demand was deferred and not deleted. A postponed liability remains alive and can revive on the final outcome of the proceedings.
Conclusion: The interest demand was only postponed and not wiped out.
Issue (ii): Whether the petitioner was eligible for settlement under the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2008 when the original assessment related to a period prior to 01.04.2002 and the appeals were withdrawn before making the application.
Analysis: Section 4 of the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2008 applies where assessment has been made prior to 01.04.2002 and no appeal or revision is pending on the date of application. The Court held that the relevant arrears arose from an assessment made prior to the cut-off date and that subsequent developments, including remand and fresh demand, could not defeat the benefit of the settlement scheme. The scheme being beneficial legislation had to receive a liberal construction.
Conclusion: The petitioner was eligible to seek settlement under the scheme.
Final Conclusion: The impugned rejection orders were set aside and the petitioner was entitled to have the settlement applications received and considered on merits.
Ratio Decidendi: Where the original assessment falls within the scheme period and the statutory condition of no pending appeal or revision is satisfied at the time of application, a postponed interest liability cannot be treated as an extinguished demand so as to defeat eligibility under a beneficial arrears-settlement scheme.
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