BONFIGLIOLI TRANSMISSIONS PRIVATE LTD. Vs. ASSISTANT COMMISSIONER (CT)

JUDGEMENT

(1.) 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.

(2.) According to the petitioner, the Chairman and Managing Director, SIDCO of Tamil Nadu Limited, Egmore, Chennai -06 had granted eligibility Certificate in EC No. 312/IX/DN, dated 17.4.2002 for availing interest free Sales Tax deferral (IFST deferral) to an extent of Rs. 1725.46 lakhs. Based on the said eligibility 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 2007 -08 and reserved a sum of Rs. 348.19 lakhs for certain contingencies in order to meet liability that may arise on finalization of assessment.

(3.) While so, it appears that the respondent passed CST assessment orders for the years 2001 -02, 2002 -03 and 2003 -04 and TNGST assessment orders for the years 2002 -03 and 2003 -04 and levied differential tax for certain turnovers for the reason that the petitioner did not file Form -C/Form -H and other declarations. According to the petitioner, the differential tax on account of non -submission of declaration forms should also be adjusted against IFST deferral amount for the respective years considering the fact that the petitioner had reserved Rs. 348 lakhs out of the total deferral amount. The grievance of the petitioner is that the respondent proceeded on the basis that the differential amount of tax is not eligible to be adjusted against the IFST deferral amount and issued arrear notice dated 30.05.2013 demanding total differential tax of Rs. 87,39,916 for CST assessment orders for the years 2001 -02, 2002 -03 and 2003 -04 and TNGST assessment orders for the years 2002 -03 and 2003 -04. The petitioner sent a reply dated 24.6.2013 and thereafter, the respondent sent a letter dated 29.8.2013, stating that under IFST scheme, amount of tax collected alone could be deferred and where the demand arises on account of difference of tax for any reason, the said amount of tax cannot be brought under the IFST scheme. The petitioner submitted a detailed reply dated 03.09.2013 informing the respondent that they had already paid Rs. 84,40,962/ - on various dates including Rs. 20 lakhs on July 31, 2013 and further issued a cheque for the balance tax of Rs. 34,2701/ - and thus the petitioner paid the entire amount of Rs. 87,39,916/ - as demanded by the respondent. The respondent issued notice dated 28.1.2014 stating that the petitioner made delayed payment of tax to tune of Rs. 87,39,916/ - for CST years 2001 -02, 2002 -03 and 2003 -04 and TNGST 2002 -03 and 2003 -04 and demanded penal interest of Rs. 1,08,88,487/ - under Sec. 24(3) of the TNGST Act, 1959. The petitioner sent a reply dated 14.2.2014, informing that raising a demand for penal interest straight away without issuing a notice would amount to denial of principle of natural justice and contrary to the instructions issued by the Commissioner of Commercial Taxes, dated 20.4.2001. Thereafter, the respondent sent a letter dated 26.2.2014, directing the petitioner to file objections if any within 15 days and also to appear for personal hearing. Pursuant to the same, the petitioner sent a detailed reply dated 11.03.2014 stating that they are eligible for deferral and the differential amount of tax could also be deferred for the respective financial years and if so computed, the number of days delay would get reduced drastically on the amount of interest would 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.