TIRUPATTUR CO OPERATIVE SUGAR MILLS LIMITED Vs. DEPUTY COMMERCIAL TAX OFFICER TIRUPATTUR NORTH ARCOT DISTRICT

JUDGEMENT

(1.) IN both these writ petitions, the Tirupattur Cooperative sugar Mills Limited represented by its Special Officer, K. Shahul Hameed, is the petitioner and the Deputy Commercial Tax Officer, Tirupattur, North Arcot and the State of Tamil Nadu represented by the Commissioner and Secretary to Government, Commercial Taxes and Religious Endowments Department, Madras-9 are the respondents. Both these writ petitions have been filed for calling for the records on the file of the first respondent in his TNGST 230737/82-83 (penalty register No. 38/85-86)dated 1st June, 1985 and TNGST 230737/82-83 (penalty register No. 35/85-86)dated 1st June, 1985 and quashing the impugned orders of the first respondent.

(2.) IT is, inter alia, stated in the affidavits sworn to by the Special Officer of the petitioner-sugar mills that the petitioner-sugar mills are the assessees on the file of the first respondent. The essential raw material for the sugar mills is sugarcane which is taxable at the point of last purchase in the State under serial No. 62 of the First Schedule to the Tamil nadu General Sales Tax Act, 1959. The rate of tax is 12 per cent and besides there is a turnover tax levied under the Tamil Nadu Additional Sales Tax Act, 1970. A Division Bench of this Court in Sakthi Sugars Ltd. v. Assistant commissioner of Commercial Taxes 1985 (59) STC 52 has held that section 24 (3)of the Tamil Nadu General Sales Tax Act, 1959, cannot be invoked until the assessment order is passed, and that under section 24 (3) interest cannot be demanded merely because of non-payment of tax along with returns wholly or partly as per rule 18 of the Tamil Nadu General Sales Tax Rules, 1959. In spite of the petitioner having submitted the above, the first respondent is seeking to recover the penal interest which is against the judgment of the above division Bench of this Court. The monthly returns were submitted under rule 18 of the Tamil Nadu General Sales Tax Rules, 1959. Due to financial crisis, the petitioner could not remit during 1982-83 purchase tax of Rs. 31, 00, 000 and additional tax of Rs. 1, 83, 000 along with the monthly returns. The mill itself was started on 21st March, 1977 and the second respondent sanctioned purchase tax subsidy for a period of five years from 21st March, 1977 to 20th march, 1982. The mills faced financial difficulties and incurred heavy losses during the period from August, 1978 to December, 1980 due to fall in sugar price and lesser cane crushing during the drought affected periods 1979-80, 1980-81 and 1983-84. In view of this, the petitioners were not in a position to repay the term loan due to financial institutions and the institutions were requested to reschedule the repayments of loans up to 1987. The ICICI imposed a condition for rescheduling of institutional loan and, therefore, suggested that purchase tax and cane cess subsidy should be exempted until the loans were repaid in full. The Director of Sugar also sent proposals to the Government for extending the purchase tax subsidy for a further period of five years. He also recommended the waiver of penal interest. However, the second respondent in g. O. Ms. No. 1047, Industries Department, dated 6th September, 1984 sanctioned rs. 50, 00, 000 as term loan for payment of purchase tax arrears. The purchase tax itself could not be paid and in fact a petition was pending for getting purchase tax subsidy for five more years after 1982. The first respondent demanded penal interest at Rs. 14, 39, 124 for belated payment of purchase tax. During the pendency of the petition before the second respondent, the petitioner submitted that once the Government refused refused to grant purchase tax subsidy, the petitioners utilised the term loan of Rs. 50, 00, 000 and completely settled the purchase tax arrears. During the pendency of the petitions before the second respondent, the petitioners submitted a revised return in form A-1 for the year 1982-83 and thereupon the first respondent made a provisional assessment for 1982-83 under rule 15 (4) demanding Rs. 31. 16 lakhs and correspondingly for 1982-83 under rule 4 of the Tamil Nadu Additional Sales tax Rules. This was also paid. The first respondent stated that the interest was not levied on the basis of final demand but was based on A-1 return submitted.

(3.) SECTION 24 (3) reads as follows : " If the tax assessed or has become payable under this Act, or any instalment thereof is not paid by any dealer or person within the time specified therefor in the notice of assessment or in the order permitting payment in instalments, the dealer or person shall pay by way of interest, in addition to the amount due, a sum equal to a sum calculated at the rate of two per cent of such amount for each month or part thereof after the date specified for its payment. " *