Heard both sides.
2.The petitioner is a manufacturer of fire works and crackers and is a small scale industry, registered under the Government of Tamil Nadu. With a view to encourage more industries in the industrially backward areas, the Government granted Interest Free Sales Tax loan, by its G.O.Ms.No.500 Industries (MIG.II) Department, dated 14.05.1990. As per the said scheme, Interest Free Sales Taxes Deferral Scheme was extended to the expansion (Part-I) as well as to the starting of new industries (Part-II). In other words, in other areas also where this scheme was not in vogue hitherto, the deferral of sales tax for the industries in these areas will be for five years, subject to a maximum of 60% of the total investment made in fixed assets in the case of new investment and 50% of the additional investment in fixed assets made in the case of expansion/diversification of the existing industries.
3.As per the G.O.Ms.No.48, Commercial Taxes and Religious Endowments Centre Department, dated 11.02.1994, the Government has directed that " the amount of sales tax or purchase tax (on sugar cane) deferred under the Interest Free sale Tax deferral scheme will be treated as deemed to have been paid and an identical amount treated as Government loan extended to the assessee subject to the condition that an agreement shall be executed by the assessee to the effect that the amount deemed to have been paid will be treated as an interest free loan repayable to the Government by the assessee in specified instalments as per prescribed in the Government Order sanctioning the deferral schemes and the Commercial Taxes Department be the agency for entering into the loan agreements, maintenance of accounts and collection of loan instalments when they fall due. The Special Commissioner and Commissioner of Commercial Taxes, is directed to prescribed the loan agreement format and to notify the officers competent to execute such agreement on behalf of the Government.
4.In pursuant to the aforesaid G.Os, the Tamil Nadu Investment Corporation Limited has also given eligibility certificate No.IFST:D:V:N:VNR:060:98-99 dated 12.10.1998 to the petitioner to avail the benefit of interest free sales tax to an extent of Rs.6.22 lakhs for 5 years from 01.04.1998 to 31.03.2003 and the petitioner also executed an agreement as provided in the said G.O with the Government of Tamil Nadu on 21.01.1999. The 2nd respondent also, by his proceedings in Roc No.A2/6530/98 dated 28.01.1999 conferred the benefit of Interest Free Sales Tax Deferral Scheme to the petitioner subject to the condition stated therein.
5.According to the petitioner, the following are the particulars about the facilities availed by the petitioner under the Interest Free sales Tax scheme:
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6.The petitioner had been demanding the respondents about the particulars of IFST loan due and the same was not furnished to him and without furnishing the particulars of the loan dues, the first respondent caused the publication in the Virudhu Nagar District Gazette dated 26.10.2005 for the attachment of the factory premises of the petitioner for sale. Therefore, the petitioner filed W.P.(MD)No.11714 of 2005 before this Honourable Court and stay was granted by this court on condition of the petitioner paying Rs.1,60,000/- in two instalments, within a period of two months and that amount was also paid and the writ petition was disposed of directing the Government to give the statement of accounts to the petitioner. Even thereafter, the respondents did not give the copies of the statement of accounts, issued notice dated 10.09.2007 to pay the entire dues. Therefore, the petitioner filed W.P.(MD)No.8740 of 2007 challenging the same and this Honourable Court was pleased to allow the writ petition, directing the respondents to furnish the details of the amount dues and as directed by this Court, the respondents has also submitted the details of IFST loan with the assessment order starting from 1998 -1999.
7.As per the statement of accounts given by the respondents a sum of Rs.3,07,901/- was due from the year 1999 to 2002 and the said amount was not paid, notice under Section 25 of the Revenue Recovery Act was issued by the 1st respondent and that is challenged in this writ petition.
8.The contention of the learned counsel appearing for the petitioner, Mr.Natarajan, is that the first respondent has no jurisdiction to invoke the provisions of Section 25 of the Revenue Recovery Act, as it is not the arrears of land revenue and as per the G.O.Ms.No.48, dated 11.02.1999, it has been specifically stated that under the Interest Free sale tax deferral scheme, the amount of sale tax will be treated as deemed to have been paid and the identical amount treated as Government loan extended to the assessee subject to the condition of a agreement executed by the assessee to that effect that the amount is deemed to have been paid and treated as Interest free loan repayable to the Government by the assessee.
9.Therefore, it was contended by the learned counsel appearing for the petitioner that the amount ceased to be the sale tax and it has become a loan payable by the assessee to the Government and therefore, it cannot be treated as arrears of land revenue and the proceedings under Section 25 of the Revenue Recovery Act cannot be initiated and is illegal.
10.The respondents filed the detailed counter affidavit and typed set stating that the petitioner has delayed the payment of sales tax by filing successive writ petitions and the respondents are well within their rights to invoke the provision of the Revenue Recovery Act, as it is only the arrears of tax for which proceedings under Revenue Recovery Act has been initiated.
11.It is no-doubt true that as per G.O.Ms.No.48, dated 11.12.1994 it has been specifically stated that the deferred sales tax will be treated as deemed to have been paid and an identical amount will be treated as Government loan payable by the assessee. The G.O. also postulates that the above deeming provision is subject to the condition of agreement being executed by the assessee in favour of the Government.
12.In this case, an agreement has been executed by the petitioner in favour of the Government, dated 21.01.1999 in which there is a clause 13, which reads as follows : " In default of the repayment of Government Loan or cancellation of the deferral facility for violation of any of the conditions as mentioned in paras 3 to 11 such Government Loan, tax and Interest due thereon, shall be recoverable in such manner as specified under Revenue Recovery Act for the Loan, under Section 26 of the TNGST Act and Section 24(2) and Section 26 of the TNGST ACT for the tax etc. and the amount is also liable for 24% Interest per annum.
13. Thus, it is seen from the said clause, in the event of default in repayment of Government Loan, the same shall be recoverable in such manner as specified under Revenue Recovery Act, as per Section 24(2) & Section 26 of TNGST Act.
14.Section 26 & 24(4) of the TNGST Act are the relevant sections. Section 26(6) of the TNGST Act enables authority to recover the amount as if it were an arrear of land revenue. As per Section 24(2) of the Act, any amount due shall have priority over all other claims against the property of the said dealer and can be recovered as loan revenue. Therefore, even though under G.O.Ms.No.48 the deferred sale tax will be treated as Government loan, by virtue of agreement executed by the petitioner, the petitioner has agreed that the amount shall be recoverable under Section 26 and 24(2) of the TNGST Act. Therefore, reading the G.O.Ms.48 along with the agreement which is also mentioned in the said G.O., the petitioner has agreed for the recovery of the Government loan as arrears of land revenue as per Section 26 and 24(2) of the TNGST Act .
15.Therefore, the 1st respondent is justified in invoking the section 25 of the Revenue Recovery Act by issuing the impugned notice. Hence, I do not see any merit in contention in the writ petition and hence, the writ petition is dismissed. Consequently, connected Miscellaneous Petition is also dismissed. No costs.
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