2020 (2) TMI 402 - HC - VAT and Sales Tax

Court allows partial relief in tax settlement petition under Tamil Nadu Sales Tax Act

RPG BTP India Pvt Ltd Versus The Deputy Commissioner (Commercial Taxes), Commercial Tax Officer, The Special Commissioner and Commissioner of Commercial Taxes

The court partially allowed the writ petitions, quashing the rejection of the petitioner's Samadhan Application to settle arrears of tax for the ... Rejection of Samadhan Application - settlement of arrears of tax under the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 - HELD THAT:- The object of the scheme under the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 is to give a quietus to an assessee to settle the disputes and therefore to the extent an assessee is in arrear of tax as defined under Section 2(b), the benefit of such scheme cannot be denied to the petitioner merely because the petitioner was also operating under the Interest Free Sales Tax Deferral Scheme. The said Scheme contemplates payment of liability which is deferred. Therefore, to that extent it cannot be said that the petitioner was in arrears of tax within the meaning of Section 24 of the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002. However, to the extent the petitioner was in arrears of tax outside deferral scheme, the petitioner is entitled to the benefit thereof. The Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 also does not expressly preclude an assessee from availing the benefit of the Samadhan Scheme, who were under the Interest Free Sales Tax Deferral Scheme for the amounts which were outside deferral period. Since the petitioner was in arrears of tax determined by the assessing officer for the non-deferral period, benefit of Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 cannot be denied to the petitioner. The petitioner is entitled to settle the arrears of tax qua non deferral amount alone - Petition allowed in part. Issues:1. Rejection of Samadhan Application under Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002.2. Eligibility for settlement under the Act.3. Interpretation of the provisions regarding splitting of cases for settling arrears.4. Compliance with the statutory timelines for issuing notices.Analysis:Issue 1: Rejection of Samadhan ApplicationThe petitioner's Samadhan Application to settle arrears of tax under the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 was rejected by the first respondent. The petitioner challenged this rejection through writ petitions, arguing that the rejection was not maintainable either on facts or on law.Issue 2: Eligibility for SettlementThe Act allows applicants to settle arrears of tax, penalty, or interest in dispute under specific conditions. The petitioner was under the Interest Free Sales Tax Deferral Scheme and had filed applications for settlement under the Act for various assessment years. The court analyzed the eligibility criteria under Section 4 of the Act and determined that the petitioner was entitled to settle arrears of tax for the non-deferral period.Issue 3: Splitting of Cases for SettlementThe petitioner contended that the Act did not preclude splitting the amount into deferral and non-deferral under the Samadhan Scheme. The court agreed that the petitioner could avail the benefit of the Samadhan Scheme for amounts outside the deferral period. It ruled that the petitioner could settle arrears of tax for the non-deferral amount alone, and the rejection of the benefit for non-deferral tax was quashed.Issue 4: Compliance with TimelinesThe petitioner argued that the notices issued were beyond the period of limitation prescribed under the Act and Rules. Specifically, the notices were issued long after the 10-day limit for rectification of defects or omissions in the application. The court did not find merit in this argument and focused on the substantive issues related to eligibility and settlement under the Act.In conclusion, the court partially allowed the writ petitions, quashing the impugned orders to the extent that the petitioner was denied the benefit of settling arrears of tax for the non-deferral period. The first respondent was directed to issue appropriate certificates to the petitioner for settling the liability to the extent of arrears of tax for the non-deferral period.