BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 7/08/2009
CORAM
THE HONOURABLE MR. JUSTICE R.S.RAMANATHAN
W.P.(MD)No.1442 of 2008
and
M.P.(MD)No.1 of 2008
M/s.Manoj Fire Works,
Rep. by its Partner,
A.Senthil Kumar ...Petitioner
Vs.
1.The Deputy Commercial Tax Officer,
Sattur, Virudhunagar Dt.
2.The Assistant Commissioner (CT),
Virudhunagar, ...Respondents
Writ Petition has been filed under Article 226 of the Constitution of
India praying for the issuance of a writ of certiorarified Mandamus, to call for
the records relating to the impugned proceeding issued by the 1st respondent
dated 28.01.2008 in Ref.NA.KA.A3.1141/04 and quash the same and pass such
further orders.
!For petitioner ... Mr.S.Natarajan
^For respondents ... Mr.Pala Ramasamy
Special Govt. Pleader
:ORDER
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:
Deferral Period Financial Year of Re-Payment IFSTL 1998-1999 2003-2004 60% of the value 1999-2000 2004-2005 of the Gross 2000-2001 2005-2006 fixed assets 2001-2002 2006-2007 2002-2003 2007-2008
——————————————————–
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.
er