TaxTMI 
TaxTMI 
2014 (11) TMI 878
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.... deferral of sales tax for a period of nine years upto a ceiling of Rs. 420.62 lakhs, which benefit was extended based on an eligibility certificate issued by SIPCOT. An agreement was entered into with the Assistant Commissioner (CT), Karur, and time for repayment was available to the petitioners till 30.06.2017. 4. A show-cause notice was issued to the petitioner, by the Assistant Commissioner (CT), Karur, on 31.08.2005, proposing to cancel the deferral agreement, dated 13.08.1999. The petitioner submitted their explanation and the Assistant Commissioner (CT), Karur, not being satisfied with the explanation offered by the petitioner, by proceedings, dated 27.09.2005, cancelled the deferral agreement and demanded the entire sales tax deferred and directed the petitioner to pay the deferred tax in one lump sum. Aggrieved by such an action, the petitioner filed a writ petition before this Court in W.P.(MD) No.11099 of 2005. 5. It is the further case of the petitioner that due to operational problem, demise of it's chairman, resignation of few directors, labour unrest and resignation of management staff, who were in-charge of account department, there was no proper attention....
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....the Settlement Act. Though there are three categories of cases, the issue involved in all these writ petitions is one and the same namely as to whether the orders passed by first respondent rejecting the petitioner's applications under the Settlement Act were in accordance with law. 8. The learned counsel for the petitioner submitted that the first respondent passed erroneous orders by totally ignoring the scope of Section 7 of the Settlement Act and failed to take note that Clauses (a), (b), (c) and (d) of Section 7 are mutually exclusive and no two clauses could be combined to pass such orders. In other words, it is submitted that the petitioner/dealer should either fall under any one of the Clauses (a), (b), (c) and (d) of Section 7 of the Settlement Act. This contention is the sheet anchor of the submission made by the learned counsel for the petitioner. 9. Further, it is submitted that the rejection of the petitioner's applications in other cases on the ground that the since special committee constituted under Section 16(D) has set aside the assessment orders and remitted back the matters to the assessing officer for fresh consideration, the benefit of the Settle....
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....tlement Act and in respect of CST cases, the petitioner would fall within the ambit of Section 7(b) of the Settlement Act and the petitioner cannot be said to fall under the category of (a) & (c) and (b) & (d) respectively. On the above grounds, the learned counsel for the petitioner sought to set aside the impugned orders. 14. The learned Additional Government Pleader for the respondents submitted that the petitioner is a registered dealer under the provisions of the erstwhile TNGST Act and CST Act and they have filed applications under Section 5 of the Settlement Act, which was rejected by the impugned orders, since the petitioner did not comply with the conditions laid down under Section 5 of the Settlement Act. It is further submitted that the petitioner was issued a pre-assessment notice calling for objections and failed to avail opportunity in spite of notice served on them and therefore the authority passed the final orders on best of judgment basis as per the provisions of the Act and such orders of assessment cannot be faulted. 15. The petitioner filed applications under Section 16(D) of the Act and in certain cases, orders of assessment were upheld and in certain ca....
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....t has been defined in Section 2(1)(b) and it includes additional sales tax, surcharge, additional surcharge and central sales tax or penalty or interest pertaining to the assessment years upto 2006-2007 for which assessment has been made prior to 01.08.2011 under the relevant Act and pending collection on the date of filing of application under the Settlement Act. 20. It is not in dispute that the first respondent is the designated authority under the provisions of the Act and appointed by the Government under Section 3. The persons, who are eligible for settlement under the Act has to fulfill the conditions under Section 4 and in this case it is not in dispute that the petitioner was entitled to avail the provisions of the Settlement Act. The procedure for filing an application has been spelt out in Section 5 of the Act. Section 6 deals with determination of amount payable by the applicant and Section 7 deals with rate applicable in determining amount payable and they are as follows: "5. Application for settlement.- (1) An application for the purpose of section 4 shall be made to the designated authority by an applicant within six months from the date of commencement of this....
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....of declaration forms which was in excess of the tax admitted as per the returns filed for the year with the corresponding arrears of penalty and interest, the applicant shall pay forty per cent of such arrears of tax pending collection on the date of application along with interest at seven and a half per cent per annum thereon and on such payment of tax, the balance of tax and interest and the entire penalty shall be waived. (c) Where it relates to arrears of tax, which was admitted as tax due as per returns filed for the year with corresponding arrears of penalty and interest, the applicant shall pay the entire arrears of tax pending collection along with interest at seven and a half per cent. per annum and on such payment, the balance of interest and the entire penalty shall be waived. (d) Where it relates to arrears of penalty or interest or both and where there is no corresponding arrears of tax pending collection on the date of application, the applicant shall pay ten per cent of the penalty and twenty five per cent of interest, the balance of penalty and interest shall be waived." 21. In terms of the above provisions, the applications shall be presented within six m....
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.... question of demanding further amount under Section 6(2) would arise. If the applicant failed to fulfill the conditions under sub-section (2) of Section 6, his application stands summarily rejected in terms of sub-section (3) of Section 6. Thus, the Act being a Settlement Act to give reprieve to the dealer/applicant and bring him out of the misery has first thrown the onus on the dealer/applicant and he has a statutory duty to compute the rate applicable in accordance with Section 7 of the Act, by considering all the relevant records. If the dealer/applicant properly computes the amount and remits the same and encloses proof of such payment along with the application under Section 5, the same will be taken for verification and if the designated authority, on going through the relevant records, finds that further amount is payable and if the same fall short of not more than 10% grant relief to the dealer and if not the application stands summarily rejected. Therefore, the Act operates on strict limits as clearly defined under the Statute. The onus is not only on the dealer to carefully peruse all his records and relevant documents while determining the rate payable by him, but also ....
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....uch a long delay and the delay remains unexplained. 26. The petitioner submitted applications for settlement under Section 5(1) by enclosing proof of payment of arrears of tax pending collection as per Section 7(c) in respect of TNGST assessments and Section 7(b) in respect of assessments under CST Act. As per the procedure under the Act, the applications should be verified by the designated authority under Section 6(1), with regard to the correctness of the particulars furnished in the applications filed under Section 5 with reference to all relevant records and it is only thereafter determination of the amount payable at the rates specified in Section 7 could be arrived at. The fundamental error committed by the first respondent is at the time when the applications were scrutinized. It is evident that there is serious procedural flaw in the manner in which the petitioner's applications were considered by the designated authority. Verification of the correctness of the particulars furnished in the applications made under Section 5 shall not mean verification of the contents of the applications alone, but also all relevant records. It could not have been done without issuing....
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....pecifically provide for an opportunity of personal hearing or issuance of show-cause notice and the only place where the authority is statutorily bound to issue show-cause notice is while deciding a case and refusing to settle the arrears of tax, penalty or interest under Section 8(2) of the Act. However, there is no statutory prohibition for the designated authority to call for particulars, hear the assessee or scrutiny of the books of accounts etc., while examining the applications under the provisions of Section 6. As noticed above, application has to be verified with reference to all relevant records and then only the correctness of determination done under Section 7 could be considered. 29. In a case, where the designated authority is not in possession of the relevant record, obviously he has to direct the petitioner/applicant to produce the records. In such circumstances, an opportunity of personal hearing is inevitable and in fact the disputed question of facts can very well be thrashed out if the assessee is called upon by the designated authority to state as to how they computed the amount based on their books of accounts or records. Therefore, though the statute does n....
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....o have been passed, only because of the appellate authority finding fault with the original order. In such circumstances, the benefit of the scheme could not be denied to the petitioner and the said decision has also been followed in the case of M/s.S.P.S.Jayam & Co., rep.by it's proprietor Mr.S.P.S.Selvaraj v. The Principal Secretary/Commissioner of Commercial Taxes and another, in W.P.(MD) No.8706 of 2009, dated 25.11.2009. Therefore, the rejection of the applications filed by the petitioners on the said ground is also not tenable. Even in these category of cases, the point raised in the first category of cases also arises and those orders also suffer from same procedural irregularity and the impugned orders in these category of cases also are required to be set aside. 34. Having set aside the impugned orders passed in the second category of cases, it has to necessarily follow the consequential order of assessment made pursuant to the order passed by the designated authority cannot be enforced as on date. Therefore, until fresh orders are passed by the designated authority by following the procedure contemplated under the Settlement Act, the impugned orders of assessment, ....