Strict construction of settlement provisions led to rejection of an expanded tax demand and confirmed taxpayer-favourable interpretation.

Settlement applications under the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 must be construed strictly on their plain words. The Court held that section 7(1)(b) applied where the dispute concerned tax and penalty together, while section 7(1)(c) was confined to penalty simpliciter. On the facts, the petitioner's application fell within section 7(1)(b), so the additional demand could not be sustained. The settled tax principle that nothing can be inferred or intended in a taxing provision, and that ambiguity must operate in favour of the taxpayer, was applied to reject the revenue's broader reading.

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Issues: Whether the petitioner's application for settlement under the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 fell under section 7(1)(b) or section 7(1)(c), and whether the demand for additional payment and the consequential rejection threat were sustainable.

Analysis: The dispute concerned arrears of tax and penalty arising from the assessment order, and the petitioner had computed the settlement amount on the basis of section 7(1)(b). The statutory scheme was examined as a taxing provision requiring plain and literal construction, without adding to or subtracting from the language used. The provision in section 7(1)(b) applied where the matter related to tax and penalty in dispute, whereas section 7(1)(c) applied to penalty simplicitor. On the facts, the petitioner's case was held to be covered by section 7(1)(b). The Court also applied the settled principle that in tax statutes nothing can be inferred or intended, and any ambiguity or drafting defect must operate in favour of the taxpayer.

Conclusion: The additional demand could not be sustained and the petitioner was entitled to settlement under section 7(1)(b).

Final Conclusion: The impugned demand was held unsustainable and the writ petition succeeded with consequential relief to the petitioner.

Ratio Decidendi: A taxing provision for settlement must be construed strictly on its plain words, and where the statutory language places the case within one charging category, the revenue cannot enlarge the liability by implication or presumed legislative intent.

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