High Court penalized petitioner's writ claiming differential tax adjustment against IFST deferral. Court held non-filing of forms precluded deferral and statutory interest requires no prior notice.
Writ petition dismissed with no costs to petitioner. Connected miscellaneous petition closed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 15.07.2015
CORAM:
The Honourable Mr. Justice S.VAIDYANATHAN
Writ Petition Nos.20179 of 2014
And M.P.No.1 of 2014
Reserved on 17.03.2015
Bonfiglioli Transmissions Private Ltd., Rep. by its Head Commercial Mr.T.K.Ravi .. Petitioner
Versus Assistant Commissioner (CT), Tambaram-1, Assessment Circle, Chennai-600 045. .. Respondent
Prayer: Writ petition filed under Article 226 of the Constitution of India praying for a Writ of Certiorari, to call for the records in the proceedings of the respondent in TNGST/0883431/2002-03 & 2003-04 CST/772273/2001-02 to 2003-04, dated 16.4.2014 issued by the respondent and quash the same as arbitrary and illegal.
For Petitioner : Mr.Joseph Prabakar For Respondent : Mr.A.R. Jayaprathap G.A (T)
ORDER
The petitioner is a registered dealers under the Tamil Nadu Value Added Tax Act, 2006 (in short, TNVAT Act, 2006) and Commercial Sales Tax Act, 1956 (in short, CST Act, 1956) with the respondent Tambaram-1 Assessment Circle. The petitioner had established Industrial Unit for the manufacture of industrial gear motor, gear boxes, etc. at SIDCO Industrial Estate, Chennai.
certificate, the petitioner entered into an agreement with the then territorial Assistant Commissioner and out of total eligible sum of Rs.1725.46 lakhs, the petitioner availed sales tax deferral amounting to Rs.1376.96 lakhs for the period from 2002-03 to 200708 and reserved a sum of Rs.348.19 lakhs for certain contingencies in order to meet liability that may arise on finalization of assessment.
be only Rs.2,51,260/- and accordingly, the petitioner expressed willingness to pay the said amount. However, the respondent issued impugned notice dated 28.01.2014 reiterating that the petitioner is liable to pay Rs.1,08,88,487/-. Aggrieved by the same the petitioner has come forward with the present writ petition.
petitioner is eligible to avail same in respect of taxes actually collected and declared in the monthly returns filed by them during the respective years. It appears that in respect of differential tax amount, the petitioner had not filed prescribed declarations, such as Form C and Form H, etc., Therefore, when once the said declaration was not made by way of filing the said forms, it is to be construed that there was no actual tax collection. Hence the respondent has rightly passed the arrears notice, dated 30.5.2013, demanding differential tax at Rs.87,39,916/-.
“12. Tax etc. or penalty leveied/leviable on taxable turnover suppressions (for the purpose of this clause the term “turnover suppression”means the taxable turnover not shown or not declared as such in the monthly returns filed by the party of the second party) are not eligible for the loan scheme”.
Relying on the above, the petitioner contended that as per the scheme, the petitioner is eligible for IFST deferral of full tax, subject to the ceiling specified in Eligibility Certificate, not exceeding Rs.1725.46 lakhs and Clause 12 of the Deferral agreement excludes only the tax and penalty levied or leviable by the assessing officer on taxable turnover suppressions from IFST deferral and since the petitioner has not made any suppressions no case of non-declaration of taxable turnover in returns was made out against the petitioner and therefore, they are entitled for IFST deferral on the entire tax assessed on the taxable turnover declared in returns. This technical ground raised by the petitioner, in my opinion, is illogical and untenable for the simple reason that even without collecting the actual taxes and declaring the same in monthly returns, the petitioner cannot avail IFST scheme. The intention of the petitioner behind not declaring in the monthly returns by filing Form C and H, etc., is that if the department fails to take note of the same, the petitioner can get the benefit of the IFST scheme in respect of transactions where the actual collection of taxes was in fact not taken place. It is to be noted that when the department has noticed and raised demand of differential tax, it is not appropriate on the part of the petitioner to take stand that they are entitled to avail the IFST scheme as they did not exceed the limit and a considerable amount has been reserved, etc., Therefore, I do not find any merit in the claim made by the petitioner.
As regards the issuance of notice before resorting to impose penal interest under Section 24(3) of the Act as per the instructions of the Special Commissioner and Commissioner for Commercial Taxes dated 20.04.2001 which insist that penalty should be imposed only
after providing sufficient opportunity to the assesses is concerned, this Court finds no considerable force in the said contention. Admittedly, the respondent sent arrear notice on 30.5.2013 and thereafter, by proceedings dated 29.8.2013, the respondent once again requested the petitioner to pay the tax while clarifying the eligibility of the petitioner to avail IFST scheme and only on 28.1.2014, the respondent has invoked Section 24(3) of the Act and levied penal interest since the petitioner failed to pay the tax. Thereafter, at the instance of the petitioner, 15 days time was given for filing objections and also granted personal hearing. Pursuant to the same, a representative of the petitioner appeared for personal hearing and filed objections on 11.3.2014 and after considering the same, the impugned proceedings, dated 16.4.2014 came to be issued by the respondent. Further, it is the specific contention of the petitioner that the liability to pay interest under Section 24(3) of the Act is automatic and absolute and no notice is necessary for levying interest. In fact, a bare perusal of Section 24(3) of the Act, this Court find that there is no provision contemplated that the levy of interest should be imposed only after issuance of notice. In this regard, it is worthwhile to refer to a decision of this Court in “M/s.Kone Elevator India Pvt.Ltd. versus The Commercial Tax Officer, Mandaveli Assessment Circle” wherein, under similar circumstances, this Court has held as under:
“1 9. Section 24(3) of the Tamil Nadu General Sales Tax Act, which provides for levy of penal interest, is extracted hereunder:
"On any amount remaining unpaid after the date specified for its payment as referred to in subsection (1) or in the order permitting payment in instalments, the dealer or person shall pay, in addition to the amount due, interest at one and a half per cent per month of such amount for the first three months of default and two per cent per month of such amount for the subsequent period of default:
Provided that if the amount remaining unpaid is less than one hundred rupees and the period of default is not more than a month, no interest shall be paid:
Provided further that where a dealer or person has preferred an appeal or revision against any order of assessment or revision of assessment under this Act, the interest payable under this sub-section, in respect of the amount in dispute in the appeal or revision, shall be postponed till the disposal of appeal or revision, as the case may be, and shall be calculated on the amount that becomes due in accordance with the final order passed on the appeal or revision as if such amount had been specified in
the order of assessment or revision of assessment, as the case may be."
“20. Sections 25 to 27 of the Parent Act, viz., TNGST Act provide for recovery of penalty or interest. Rule 9 of the TNAST Rules states that save as otherwise expressly provided for in TNAST Rules, the provisions of the Tamil Nadu General Sales Tax Rules, 1959 shall apply mutatis mutandis to the additional tax leviable under Section 2 of the Act. With the above statutory provisions relating to the levy of penal interest in the Parent Act as well as in the Saving Clause provided in the TNAST Rules, the Tamil Nadu Special Tribunal in a batch of cases inE.I.D. Parry (India) Ltd., v. Asst. Commr. (CT) (TNTST), reported in 1999 (113) STC 233, considered the following and other issues,
(i)The competence of the Assessing Officer in issuing notice/order which levied 24(3) penal interest for belated submission/payment of tax or payment of tax on the basis of revised returns filed before final assessment or confirmation orders passed in Revision.
(ii)The validity of the notice/order which levied 24 (3) penal interest on additional tax/surcharge tax for belated payment or payment made by filling returns before the completion of final assessment or orders passed in revision justifying such orders.
(iii)The point of time, to which, the penal interest under Section 24(3) of the Act is leviable with reference to the revised returns filed and payments made.
(iv)The plea of refund due to the petitioner has not been adjusted properly and hence penal interest levied under Section 24(3) of the Act has to be cancelled.
“25. The amendment Act 14 of 2005, enabling the assessing authority to levy interest on any amount remaining unpaid after the specified date in addition to such amount of additional tax or penalty due, has not been challenged so far. The main contention of the petitioner that in the absence of any substantial provisions under the TNAST Act, authorising the levy of penal interest, the penalty imposed by the respondent under Section 24(3) of the TNGST Act, for belated payment of additional sales tax is without jurisdiction, has already been answered by the Full Bench of the Special Tribunal inE.I.D. Parry (India) Ltd., v. Asst. Commr. (CT) (TNTST), reported in 1999 (113) STC 233, and it has become final. That apart,
the above amendment in Act 14 of 2005, giving retrospective effect, for the levy of penal interest on the remaining amount unpaid after the specified date, and the validation provision are squarely applicable to the facts of this case and therefore, the contentions of the petitioner that the demand made by the assessing officer without jurisdiction, is not tenable.”
10. In view of the above discussion, this Court does not find any irregularity or illegality in the impugned proceedings, dated 16.4.2014 issued by the respondent.
Accordingly, the Writ Petition fails and it is dismissed No
costs. Consequently, connected MP is closed.
Sd/-
Assistant Registrar(CO)
//True Copy//
Sub Assistant Registrar
Suk
To
Assistant Commissioner (CT),
Tambaram-1, Assessment Circle,
Chennai-600 045.
1 cc to Mr. Joseph Prabakar, Advocate, sr. 36496
W.P.No.20179 of 2014
and
M.P.No.1 of 2014
CTK (CO)
kk 7/8
3 issues framed by the court
Whether the petitioner is eligible for Interest Free Sales Tax deferral (IFST) on differential tax levied due to non-filing of mandatory declaration forms.
Whether the respondent was required to issue a notice preceding the levy of penal interest under Section 24(3) of the TNGST Act to comply with natural justice and departmental instructions.
Whether the present writ petition is maintainable without exhausting the remedy of revision under Section 33 of the TNGST Act 1959.
Colour shows how this judgement treated each authority
M/s.Kone Elevator India Pvt.Ltd. versus The Commercial Tax OfficerExplained¶31
M/s.Kone Elevator India Pvt.Ltd. versus The Commercial Tax Officer, Mandaveli Assessment Circle
E.I.D. Parry (India) Ltd., v. Asst. Commr. (CT) (TNTST)Applied¶40
E.I.D. Parry (India) Ltd., v. Asst. Commr. (CT) (TNTST), reported in 1999 (113) STC 233
4 provisions across 3 enactments
Bonfiglioli Transmissions Private Ltd.
Assistant Commissioner (CT), Tambaram-1, Assessment Circle, Chennai-600 045
S. Vaidyanathan
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
