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2016 (9) TMI 870 - MADRAS HIGH COURT

2016 (9) TMI 870 - MADRAS HIGH COURT - TMI - Rejection of order of settlement commission - Tamil Nadu Sales Tax [Settlement of Arrears] Act [29 of 2011] - procedure to be followed before passing any decision by settlement commission - proper verification of the application as per provision Section 6 of the Act - is the order passed by settlement authority valid which has been passed without following the procedure contemplated under the Act and has lost sight of the object with which the Settlem .....

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ding an opportunity of personal hearing to the petitioner to produce Books of Accounts and relevant records for the purpose of verifying the correctness of the particulars furnished by the petitioner in the application made under Section 5 of the Settlement Act and the computation made by the petitioner under Section 7 of the Act. The respondent shall pass final orders, on merits and in accordance with law, within a period of three months - petition allowed - decided in favor of petitioner. - WP .....

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the order passed by the Joint Commissioner [CT], Vellore Division, who is the Designated Authority under the provisions of Tamil Nadu Sales Tax [Settlement of Arrears] Act [29 of 2011] [hereinafter referred to as the Act ] in RC C3/990/2012/2005-2006 and RC C3/2336/2012/ 2006-2007 dated 30.3.2015. 3. The undisputed facts are that the petitioner filed an application under Section 5 of the Settlement Act and the application had to be processed by the Designated Authority in accordance with the pro .....

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mediately and may file the application. The petitioner complied with the same and also submitted a representation to the Designated Authority on 13.01.2015. Thereafter, the Designated Authority was required to proceed in accordance with the provisions of the Act to determine the application filed by the petitioner under Section 5 of the Act. 4. However, on a perusal of the impugned proceedings, it is seen that the Designated Authority has gone into the merits of the assessment and in fact confir .....

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the first respondent is the designated authority under the provisions of the Act and appointed by the Government under Section 3. The persons, who are eligible for settlement under the Act has to fulfill the conditions under Section 4 and in this case it is not in dispute that the petitioner was entitled to avail the provisions of the Settlement Act. The procedure for filing an application has been spelt out in Section 5 of the Act. Section 6 deals with determination of amount payable by the ap .....

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ates specified in section 7. (2) A separate application shall be made for each assessment year. (3) The applicant shall send a copy of the application made under sub-section (1) to the assessing authority, appellate authority or revisional authority under the relevant Act, before whom any proceeding or appeal or revision, as the case may be, is pending, within seven days from the date of making such application before the designated authority. 6. Determination of amount payable by the applicant. .....

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the applicant has not paid ninety per cent of the amount payable under section 7 along with the application, the designated authority shall summarily reject the application. (4) The amount determined under sub-section (1) shall be rounded off to the nearest rupee and, for this purpose, where such amount contains a part of a rupee, and, if such part is fifty paise or more, it shall be rounded off to the nearest rupee, and if such part is less than fifty paise, it shall be ignored. 7. Rate applic .....

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x, the balance of tax and interest and the entire penalty shall be waived. (b) Where it relates to arrears of tax, including any arrears of tax accrued due to non-filing of declaration forms which was in excess of the tax admitted as per the returns filed for the year with the corresponding arrears of penalty and interest, the applicant shall pay forty per cent of such arrears of tax pending collection on the date of application along with interest at seven and a half per cent per annum thereon .....

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s of penalty or interest or both and where there is no corresponding arrears of tax pending collection on the date of application, the applicant shall pay ten per cent of the penalty and twenty five per cent of interest, the balance of penalty and interest shall be waived. 22. Therefore, the applicant, while submitting application under Section 5 has to calculate the amount payable as per the rates mentioned in Section 7(a) to (d) and remit the same and file proof of payment along with applicati .....

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In terms of Section 6(1), the designated authority is bound to verify the correctness of the particulars furnished in the application made under Section 5 with reference to all relevant records and determine the amount payable at the rate specified in Section 7. 23. Therefore, at that stage the designated authority has to verify as to whether the rates as calculated by the petitioner while submitting application under Section 7 was correct. In the event the designated authority finds any discre .....

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ion (2) of Section 6, his application stands summarily rejected in terms of sub-section (3) of Section 6. Thus, the Act being a Settlement Act to give reprieve to the dealer/applicant and bring him out of the misery has first thrown the onus on the dealer/applicant and he has a statutory duty to compute the rate applicable in accordance with Section 7 of the Act, by considering all the relevant records. If the dealer/applicant properly computes the amount and remits the same and encloses proof o .....

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ant documents while determining the rate payable by him, but also on the assessing officer while verifying the application as to the correctness of the particulars furnished exercising power, under Section 6(1) by taking into consideration relevant records and then determine the amount payable at the rates specified in Section 7. It is a settled legal principle that any Settlement Act or amnesty scheme have to be strictly interpreted and there cannot be any substitution or reading down the provi .....

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s liability or interest. In terms of sub-section (2) to Section 8, the designated authority, for reasons, to be recorded in writing, may refuse to settle the arrears of tax, penalty or interest and such orders shall be passed after giving reasonable opportunity to the applicant to show- cause against such refusal. In terms of sub-section (3) to Section 8, the authority notified by the Government may, at any time, within ninety days from the date of issuance of certificate under sub-section (1) o .....

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riting after issuing show-cause notice. 6. From a reading of the impugned order, it is evidently clear that the respondent did not follow the procedure contemplated under the Act and has lost sight of the object with which the Settlement Act was enacted. Without proper verification of the application as per provision Section 6 of the Act, the Designated Authority could not proceed further and the error has occurred from the said stage. In fact, in Cheran's case, the Court pointed out as foll .....

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led to return the applications for rectification of defects in terms of Rule 3 of the Rules. If this had been done, then the designated authority could have communicated the petitioner/applicant that the rates so determined by the petitioner itself is an erroneous calculation. This could have avoided the entire litigation in the matter. It is true that the statute does not specifically provide for an opportunity of personal hearing or issuance of show-cause notice and the only place where the au .....

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ly the correctness of determination done under Section 7 could be considered. 29. In a case, where the designated authority is not in possession of the relevant record, obviously he has to direct the petitioner/applicant to produce the records. In such circumstances, an opportunity of personal hearing is inevitable and in fact the disputed question of facts can very well be thrashed out if the assessee is called upon by the designated authority to state as to how they computed the amount based o .....

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