Sales tax settlement benefits cannot be claimed by an auction purchaser who is not the dealer liable for arrears.

An auction purchaser of a defaulter's assets was held not to qualify as a dealer or to step into the defaulter's shoes for claiming settlement benefits under the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2010, because the scheme was confined to persons answerable as dealers under the sales tax laws. The court also held that a refund direction beyond the scope of the settlement dispute could not be sustained where the amount had been paid in the settlement process and no such relief was properly sought. The refund of Rs.14,41,755 was set aside, and the purchaser remained liable for the differential tax, with liberty to proceed against the purchased assets according to law.

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Issues: (i) Whether an auction purchaser of the defaulter's assets could be treated as a dealer and as having stepped into the shoes of the defaulter so as to claim the benefit of the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2010. (ii) Whether the direction to refund part of the amount already paid under the settlement proceedings could be sustained.

Issue (i): Whether an auction purchaser of the defaulter's assets could be treated as a dealer and as having stepped into the shoes of the defaulter so as to claim the benefit of the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2010.

Analysis: The settlement scheme was held to be available only to an applicant who is a dealer within the meaning of the Act. The definitions of applicant and relevant Act showed that the benefit was confined to persons answerable as dealers under the repealed sales tax laws. The respondent had purchased the property in an auction on an as is where is basis and undertook to bear statutory liabilities, but did not become the dealer liable for the arrears. No material was shown to establish that the respondent was itself a dealer or that it could claim the status of the defaulting assessee merely by purchasing the asset.

Conclusion: The respondent was not entitled to be treated as a dealer or as having stepped into the shoes of the defaulter, and therefore was not eligible to claim settlement benefits on that basis.

Issue (ii): Whether the direction to refund part of the amount already paid under the settlement proceedings could be sustained.

Analysis: The respondent had sought acceptance of an additional amount over and above what had already been paid to settle the arrears. The appellate court held that the learned Single Judge could not, on the facts, confine retention only to amounts supported by available assessment records and direct refund of the balance, since that relief had not been sought and the respondent had voluntarily engaged with the settlement scheme. The refund direction was therefore inconsistent with the scope of the dispute and the settlement framework.

Conclusion: The direction to refund Rs.14,41,755/- was unsustainable and was set aside.

Final Conclusion: The writ appeal succeeded, the writ petition stood dismissed, and the respondent was held liable to pay the differential tax amount to the Commercial Tax Department, with liberty to proceed against the purchased assets in accordance with law.

Ratio Decidendi: The benefit of a sales tax settlement scheme confined to a dealer cannot be claimed by a mere auction purchaser of the defaulter's assets, and a court cannot grant a refund relief beyond the settlement dispute raised by the parties.

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