Heard Mr.N.Murali, learned counsel appearing for the petitioner and Mr.K.Venkatesh, learned Government Advocate appearing for the respondents.
2.The petitioner is a Workers Cooperative Society, called Indian Coffee Workers Cooperative Society Limited, registered under the Pondicherry Societies Act. The petitioner effects sale of food and drinks to its customers in their restaurants, which were four in number in the State of Tamil Nadu. It is stated that their business has been closed down in the State of Tamil Nadu and they have got only one establishment in Pondicherry, and the Society is reeling in financial difficulties. The petitioner applied for grant of exemption from payment of sales tax under the provisions of the Tamil Nadu General Sales Tax, 1959 (hereinafter referred as the TNGST Act). This was considered and exemption vide notification G.O.P.No.669 dated 21.11.1990, was granted with effect from 01.04.1990.
3.The issue involved in this writ petition is relatable to the assessment for the year 1989-90. The petitioner was assessed to tax for the year 1989-90, and an order was passed to the said effect on 27.09.1990. The petitioner did not challenge the assessment order, but, filed an application for waiver of penalty under Section 16(B) of the TNGST Act, dated 18.03.2002, before the Special Commissioner and Commissioner of Commercial Taxes. This was rejected by the Special Commissioner, by order dated 03.01.2003. Subsequently, the petitioner moved the Tamil Nadu Taxation Special Tribunal in O.P.No.249 of 2003, to quash the proceedings rejecting their application for waiver. The said petition was dismissed, as against which, the petitioner filed a writ petition in W.P.No.16642 of 2003. The Honble Division Bench of this Court by order dated 23.09.2004, set aside the proceedings of the Special Commissioner and remanded the matter for fresh consideration to dispose of the petition for waiver dated 18.03.2002.
4.While the matter stood thus, the Tamil Nadu Government enacted the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2006 (hereinafter referred as the Samadhan Act), which provided for the dealers to file application for settlement of the cases. Accordingly, the petitioner filed an application on 13.11.2006 before the first respondent/the Designated Authority under the Samadhan Act.
5.In terms of Section 7 of the Samadhan Act, the rate applicable in determining the amount payable has to be determined by the dealer and to be remitted along with the application. Three types of contingencies are provided under Section 7 of the Samadhan Act, which are under Clauses (a), (b) and (c) in Section 7 of the Samadhan Act.
6.The petitioner classified their case under Clause (a) of Section 7 of the Samadhan Act, and paid the entire arrears of tax pending collection. This application was rejected by order dated 03.07.2007. The first respondent came to the conclusion that the application filed by the petitioner would fall under Section 7(c) of the Samadhan Act, and not under 7(a) of the Samadhan Act. Therefore, the petitioner having not paid 10% of the penalty and 25% of the interest as payable under Clause (c) of Section 7 of the Samadhan Act, his application was rejected as not being in order. The petitioner did not have any opportunity before such an order was passed. Therefore, it is clear that the order of the first respondent dated 03.07.2007, is in violation of principles of natural justice.
7.After the order of rejection dated 03.07.2007, the first respondent sent another communication on 25.03.2008, stating that the application under the Samadhan Scheme has been rejected and the petitioner was advised to pay the tax. This was challenged by the petitioner in W.P.No.19024 of 2008. The writ Court being satisfied that the order of rejection was devoid of reasons, set aside the same and remanded the matter for fresh consideration by its order dated 13.08.2008. After which the first respondent issued notice dated 29.09.2008, for which, the petitioner submitted their reply on 21.10.2008, pursuant to which the impugned order has been passed. The reasons assigned in the impugned order is only in the last paragraph, which says that the amount having not been paid along with the application, it cannot be entertained.
8.The stand taken by the first respondent is incorrect, owing to the fact that at the time, when the petitioners application was rejected by order dated 03.07.2007, the petitioner had no prior notice of the proceedings. The Samadhan Act provides for a self-assessment in the sense that it is the dealer, who has to decide at the first instance as to whether his application will fall under Clauses (a) or (b) or (c) under Section 7 of the Samadhan Act. The petitioner classified his case under Section 7(a) of the Samadhan Act and paid the entire tax. The first respondent held that the application falls under Section 7(c) of the Samadahan Act, but instead of returning the application, rejected the same.
9.In somewhat similar circumstances, the Honble Division Bench in the case of Chetak Timber Products (P) Ltd., vs. Joint Commissioner and another reported in (2014) 75 VST 481 (Mad), held that when there is a defective application, the Designated Authority should return the application for rectification.
10.In my considered view, if, according to the first respondent, the classification of the petitioners case should be under Section 7(c) of the Samadhan Act, then the application should have been returned and to be re-presented for compliance of the condition under Section 7(c) of the Samadhan Act. This having not been done, the rejection of the application is illegal and incorrect. If such is the interpretation, then obviously, the payment made by the petitioner by accepting the classification of the petitioner's case under Section 7(c) of the Samadhan Act, should date back to the date of the original application viz., 13.11.2006.
11.In the light of the above factual position, the reason assigned by the first respondent to state that the petitioners application does not comply with the conditions of the Samadhan Act, is incorrect and for all practical purposes, the payment effected by the petitioner by paying 10% of the penalty and 25% of the interest as provided for under Section 7(c) of the Samadhan Act, should date back to 13.11.2006. This is all the more because, the petitioner had already paid the entire tax under Section 7(a) of the Samadhan Act.
12.For all the above reasons, this writ petition is allowed, the impugned order is set aside, the matter is remanded to the first respondent for fresh consideration, who shall take on file the application for settlement, afford an opportunity of personal hearing to the petitioner and take a decision on merits and in accordance with law. No costs. Consequently, connected miscellaneous petition is closed.
23.11.2017 abr Index:Yes/No T.S.SIVAGNANAM, J.
abr To
1.The Joint Commissioner (CT), Vellore Division, Vellore-632 001.
2.The Commercial Tax Officer, Cuddalore Taluk, Sub-Jail Road, Manjakuppam, Cuddalore.
W.P.No.6653 of 2009 23.11.2017