Madras High Court
T. Subramanian vs The Deputy Commercial Tax Officer on 2 February, 2011
Author: M.Venugopal
Bench: M.Venugopal
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 02/02/2011 CORAM THE HONOURABLE Mr.JUSTICE M.VENUGOPAL Writ Petition (MD) No. 11717 of 2005 T. Subramanian ... Petitioner Vs The Deputy Commercial Tax Officer Ettayapuram Tuticorin District. ... Respondent Petition filed under Article 226 of the Constitution of India praying for the issuance of a writ of certiorari to call for the records relating to the notice issued by the respondent in his No.Va.Vi.No.5881012/98-99 dated 31/8/2005 and quash the same. !For petitioner ... Mr.M.Md.Ibrahim Ali ^For respondent ... Mr.D.Sasikumar, GA :ORDER
The petitioner has filed the present writ petition seeking the relief of Writ of Certiorari in calling for the records pertaining to the notice issued by the respondent in Ref.No.Va.Vi.No.5881012/98-99 dated 31/8/2005.
2. The petitioner is the father of Mr.Manikanda Mariappan being the owner of Sree Krishna Carbide. The said industry has been started in November 1988. It is the plea of the petitioner that high tension power is the main raw material for the carbide industry and because of the increase in power tariff for high tension, the petitioner has not been in a position to run the industry in a profitable manner. Therefore, the industry has been closed from 15/1/1999 to June 1999. Again, the factory has been closed from September 1999 to March 2002.
3. According to the petitioner, sales tax accounts for the assessment period from 1/4/1998 to 31/3/1999 and for the period from 1/4/1999 to 31/3/2000 have been submitted before the respondent/Deputy Commissioner Tax Officer, Ettayapuram, Tuticorin District.
4. The learned counsel appearing for the petitioner submits that the petitioner in para 3 of the affidavit in W.P.(MD) No.11717 of 2005 has categorically stated that in respect of year 1998 - 1999, a sum of Rs.42,912/- has to be paid under the Tamil Nadu General Sales Tax and a sum of Rs.18,270/- has to be paid towards Central Sales Tax. In respect of the year, 1999 - 2000, a sum of Rs.41,580/- has to be paid by the petitioner as Tamil Nadu General Sales Tax and towards Central Sales Tax, a sum of Rs.21,600/- will have to be paid.
5. The specific plea of the petitioner in the writ petition is that the assessment order pertaining to the year 1988 - 1999, 1999 - 2000 that the demand in Form B 3 as per Section 18 (6) of the Tamil Nadu General Sales Tax Act has not been served on the petitioner in respect of Sree Krishna Carbide Industry. The Respondent has issued an auction notice dated 24/12/2002 bringing the movable property of the petitioner for auction on 17/4/2003.
6. It is to be borne in mind that the petitioner has challenged the auction notice dated 24/12/2002 issued by the respondent in W.P.(MD) No.11471 of 2003 before the Principal Seat and in W.P.M.P on 14/10/2003, this Court has been pleased to grant interim stay subject to the condition that the petitioner pays a sum of Rs.1,50,000/- in three equal instalments. However, the said amount has not been paid by the petitioner. Subsequently, on 9/6/2004, the respondent has issued another notice bringing the property of Sree Krishna Carbide Industry in an open auction on 15/9/2004. The petitioner has filed W.P.(MD) No.787 of 2004 before Madurai Bench of Madras High Court, challenging the auction proceedings. This Court, by an order dated 27/8/2004 has directed the petitioner to pay the arrears in six equal instalments. The petitioner has accordingly, paid the amount without any default.
7. The Respondent/Deputy Commercial Tax Officer, Ettayapuram, Tuticorin District has issued the demand notice dated 31/8/2005 claiming interest as per Section 24 (3) of the Tamil Nadu General Sales Tax Act, 1959 amounting to Rs.1,41,882/- for the belated payment of due amount.
8. The Learned counsel appearing for the petitioner urges before this Court that the petitioner has paid the entire arrears in six equal instalments as ordered by this Court in W.P.(MD) No.787 of 2004 by means of an order dated 27/8/2004 and when the Court itself has permitted the petitioner to pay the due amount in six equal instalments, the claim of interest for the perpetrated delayed payment claimed by the respondent in the impugned notice dated 31/8/2005 of the respondent is clearly an illegal, invalid and unsustainable one in the eye of law.
9. The other limb of the argument projected by the learned counsel for the petitioner is that the first writ petition filed by the petitioner in W.P.(MD) No.1147 of 2003, challenging the notice issued by the respondent dated 24/12/2002 is pending before the Principal Seat of this Court and when that being so, then, it is not open to the respondent to issue another notice for public auction of the property.
10. At this stage, it is useful for this Court to refer to the order passed by this Court in W.P.(MD) No.787 of 2004 dated 27/8/2004 between S.MANIKANDAMARIAPPAN and THE DEPUTY COMMERCIAL TAX OFFICER, ETTAYAPURAM, TUTICORIN DISTRICT, wherein at paragraph 3, it is enjoined as follows:-
"The petitioner should pay a sum of Rs.53,860/- within one week from this date and the remaining sum of Rs.3,50,000/- should be paid in six equal instalments. The first instalment should be paid on or before 1/10/2004 and so on, on the first of every succeeding month till the payment of the sixth instalment. The respondent shall keep the impugned order dated 9/6/2004 in abeyance and in the event of the petitioners failing to comply with the payment of any one of the instalments it will be open for the respondent to implement the impugned notice without any further reference to this Court. Hence, this writ petition is disposed of on above terms."
Thus, it is clear that the petitioner has been permitted to pay a sum of Rs.52,860/- within one week from the date of order namely 27/8/2004 and the balance of Rs.3,50,000/- will have to be remitted by the petitioner in six instalments etc.
11. Admittedly, the petitioner has paid the entire tax liability amount by satisfying the tenor of the order passed by this Court in W.P.(MD) No.787 of 2004 dated 27/8/2004.
12. The point that arises for numination which revolves in a narrow compass is, "Whether the Respondent/Deputy Commercial Tax Officer, Ettayapuram, Tuticorin District is entitled to claim interest for the belated payment so made by the petitioner in respect of Sree Krishna Carbide Industry as per the notice of demand dated 31/8/2005?"
13. The learned counsel appearing for the petitioner cites an order of this Court made in W.P.(MD) No.1199 of 2006 dated 8/2/2006 between SIVAKASI ELECTRO CHEMICALS LTD., rep. BY ITS CHAIRMAN AND MANAGING DIRECTOR, C.A.JAIRAJ, VIRUDHUNAGAR DISTRICT, wherein at paragraphs 5 and 8, it is observed as follows:-
"5. Learned counsel would contend that the matter was pending before this Court for the past three years, it is not open to the third respondent to collect the belated payment surcharge.
8. Learned counsel for the petitioner would further contend that the peak hour collection charges may be permitted on the instalment basis. Even though, Mr.A.Baskar learned counsel for the respondents would oppose the same, this Court is of the considered view that the amount of peak hour charges to the extent of Rs.1,12,384/- can be permitted to be payable by the petitioner in two equal instalments, out of which the first equal instalment shall be paid on or before 1/3/2006. The second equal instalment shall be paid on or before 1/4/2006. Failure to comply will result in the entire amount due and respondents entitled to proceed to recover.
14. He also seeks in aid of the order passed by this Court in W.P.(MD) No.254 of 2007 dated 18/6/2009 between SIVAKASI ELECTROCHEMICALS LTD., rep. BY ITS CHAIRMAN AND MANAGING DIRECTOR, VIRUDHUNAGAR DISTRICT and THE SUPERINTENDING ENGINEER, VIRUDHUNAGAR ELECTRICITY DISTRIBUTION CIRCLE, VIRUDHUNAGAR, wherein in paragraph Nos.10 and 15 to 17, it is observed hereunder:-
"10. The learned counsel appearing for the petitioner further contended that the respondent has permitted to pay the Electricity Tax in 12 equal monthly instalments and therefore, they have accepted the payment in 12 instalments and hence, there is no belated payment and therefore, the respondent is not entitled to levy the surcharge on the belated payment in respect of Electricity Tax.
15. In other words, the licensee acts as a collecting agent for the Government and ultimate recipient of tax is the Government and the Government alone can impose any interest on the belated payment of Electricity Tax and it is made clear under Section 8 of the said Act.
16. As per the Clause 20.01 of the Terms and Conditions of the Tamil Nadu Electricity Board, the licensee is entitled to collect belated payment only on the amount due and payable to the licensee namely consumption charges. As the Electricity Tax is not the amount due and payable to the licensee and it is payable only to the Government, the licensee, the respondent herein, has no right to collect the surcharge on the belated payment of Electricity Tax and therefore, the claim of the respondent of a sum of Rs.2,34,308/- being the belated payment of surcharge for the non payment of E-Tax on time, cannot be sustained and the respondent is not entitled to levy any surcharge on the E-Tax.
17. Therefore, the writ petition is allowed and the demand of the respondent in collecting the B.P.S.C. on the belated payment of arrears on E-Tax of Rs.2,34,308/- alone is set aside. Consequently, connected Miscellaneous Petition is closed. No costs."
15. Advancing his arguments, it is the contention of the learned counsel for the petitioner that as per Section 24 (3) of TNGST Act, the Respondent/Deputy Commercial Tax Officer, Ettayapuram, Tuticorin District cannot make a demand on the petitioner to pay an interest amount for the belated amount because of the simple fact that in the present case, the petitioner has paid the amounts in instalments as per order dated 27/8/2004 in W.P.(MD) No.787 of 2004.
16. One cannot brush aside a vital fact that the recovery provisions of the Tamil Nadu General Sales Tax Act are meant for fast and prompt collections of revenue. Generally, the defaulters are liable to pay interest on delayed payment of tax.
17. This Court worth recalls the decision in Indian Commerce and Industries Co. Pvt. Limited v. Commercial Tax Officer and others reported in 2003 (129) Sales Tax Cases 509, wherein it is held that 'the petitioners filing revised return and paying tax due thereafter are liable to pay interest from the date tax became payable.'
18. Also, this Court aptly points out the decision in Apollo Tubes Limited v. Additional Deputy Commercial Tax Officer, Ranipet and another reported in 1994 (93) Sales Tax Cases 339, at page 340, wherein this Court has among other things observed that '... in the absence of proof of payment of tax, it is open to the department to recover the tax due in accordance with the provisions of the Act. Automatically, the provisions for payment of interest will also come into play, and the department is entitled to recover interest as provided under Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959., etc.'
19. In Godrej & Boyce Manufacturing Co. Ltd. v. Joint Commissioner of Commercial Taxes-IV and others reported in 1995 (97) Sales Tax Cases 44, wherein it is laid down that 'liability to pay interest under Section 24(3) is automatic and absolute from the date on which it becomes due, etc.'.
20. As a matter of fact, levy of interest and belated payment/delayed payment of tax is a part of the machinery in tax law. Furthermore, the interest claimed from the petitioner can only be described as a compensatory one. A reading of Section 24 (3) of TNGST Act clearly points out that the claim of interest as per Sub-Sections 3 and 3 A of Section 24 of the Act is an automatic one in ordinary or general cases.
21. It is to be pointed out that a recovery of penalty or interest payable as per Section 25 of the Tamil Nadu General Sales Tax Act, 1959, shall be deemed to be tax under this Act for the purposes of collection and recovery and shall be without prejudice to the institution of any proceeding for an offence under this Act, or for the recovery of the entire amount remaining unpaid under this Act.
22. Indeed, ordinarily, there is no discretion vested with the authority under the Tamil Nadu General Sales Tax Act, 1959, to desist from levying interest or reducing the same. Also, no notice or providing reasonable opportunity to the assessee is essential, as opined by this Court.
23. In law, there is no Estoppel against a Statute. But, in the present case on hand, this Court earlier in W.P.(MD)No.787 of 2004 has permitted the petitioner therein to pay the due tax amount/liability in installments. At that time, on both sides, no plea has been raised in regard to the levy of interest for the delayed payment or the payment of interest by the assessee.
24. An important fact which is to be looked into and appreciated by a particular authority in the present case on hand is that admittedly, the petitioner has been permitted to pay the entire tax liability due amount as per instalments made as mentioned in W.P.(MD) No.787 of 2004 dated 27/8/2004.
25. As against the order passed in W.P.(MD)No.787 of 2004 dated 27.08.2004, no writ appeal has been filed and hence, the order passed in W.P(MD)No.787 of 2004 has become final and binding between the parties. As such, the respondent cannot make a demand as per the impugned notice dated 31/8/2005 for the levy of interest in regard to the delayed payment made by the petitioner through instalments in respect of the tax liability for the assessment years relating to 1998-99 and 1999-2000.
26. Therefore, this Court is of the considered view that in a case where the Court of law has permitted the petitioner to pay the tax liability due amount in instalments, then, the claim/levy of interest by the respondent as per demand notice dated 31/8/2005 for the period 1998 - 1999 amounting to a sum of Rs.1,41,882/- is not warranted in view of the peculiar facts and circumstances of the present case which float on the surface.
27. To put it differently, when this Court has permitted the petitioner in W.P.(MD) No.787 of 2004 to pay the tax liability amounts in instalments as per the final order dated 27/8/2004 by exercising its judicial discretion, then, the invocation of Section 24 (3) of the Act for levying of interest for the payment made in instalments as per the order of this Court, is not a justifiable, valid and prudent one, in the considered opinion of this Court.
28. Hence, this Court is perforced to interfere with the order passed by the Respondent/Deputy Commercial Tax Officer, Ettayapuram, Tuticorin District dated 31/8/2005 and since the same is not in order and a valid one in the eye of law, this Court sets aside the same to promote substantial cause of justice. Viewed in that perspective, the writ petition is allowed.
29. In the result, the writ petition is allowed, leaving the parties to bear their own costs. Consequently, the connected Miscellaneous Petition is closed.
mvs.
To The Deputy Commercial Tax Officer Ettayapuram Tuticorin District.