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2021 (3) TMI 132 - HC - VAT and Sales TaxLevy of penal interest under Section 24(3) of the Tamil Nadu Value Added Tax Act, 2006 - belated payment of sales tax by the appellant - Principles of natural justice - HELD THAT:- Tax or penalty levied/leviable on taxable turnover suppression are not eligible for loan scheme. Turnover suppression has been defined to mean taxable turnover not shown or not declared as such in the monthly returns filed by the appellant. It is not in dispute that the appellant has filed their monthly returns which has reflected all the transactions. In respect of certain transactions the appellant has declared in the monthly returns as 'Sale against Form C', 'Sale against Form H' and in respect of certain transactions, incorrect rate of tax was adopted. The demand of penal interest flows from the demand dated 29.08.2013. The appellant had been diligently prosecuting the matter, in the sense promptly submitting their objections as and when notices were issued by the respondent. Though the appellant had been doing so by sending reply dated 24.06.2013, 03.09.2013, 14.02.2014 and 11.03.2014, they have not been favoured with a speaking order, nor provided an opportunity of personal hearing, though sought for. Whether clause 12 of the agreement could have been invoked by the respondent to make a demand and consequently, demand penal interest? - HELD THAT:- If there is a turnover suppression, the appellant would not be eligible for the loan scheme. Turnover suppression has been defined to mean taxable turnover not shown or not declared as such in the monthly returns filed by the appellant. It is not in dispute that the appellant has filed the monthly returns and has shown the taxable turnover - Prima facie, in our view it cannot amount to suppression as such transactions are permissible under the Act. Eligibility or ineligibility would have to be decided by interpreting all the conditions in the agreement as well as in the eligibility certificate. Therefore, the respondent has proceeded on a wrong footing. If the respondent has to make out a case of turnover suppression for invoking clause 12, then the respondent should establish that the turnover has not been shown in the monthly returns filed by the dealer. The argument of the respondent is that the liability to pay interest is automatic in terms of section 24(3) of the TNGST Act. Therefore, no notice is necessary for levying penal interest. A distinction has to be drawn in the appellant's case owing to the fact that the appellant disputes the allegation of the Department that they are a defaulter, i.e. there has been a turnover suppression. Unless the said issue is decided, the aspect of delay in payment of taxes cannot be decided. Only after deciding the delay which is alleged to have occurred, interest can be levied. Therefore, in the factual circumstances of the case, issuance of notice on the appellant was absolutely necessary. This Court is convinced to hold that the respondent has failed to address the crucial issues in spite of the appellant raising objections and mechanically proceeded to issue the notice demanding penal interest. Hence, this Court is inclined to interfere with the notice issued by the respondent which was impugned in the writ petition dated 16.04.2014 and remand the matter back to the Assessing Officer to take a fresh decision in the matter after affording an opportunity to the appellant to submit detailed objections and after giving an opportunity of personal hearing to the authorized representative of the appellant - Appeal allowed by way of remand.
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