TMI Blog2018 (6) TMI 1064X X X X Extracts X X X X X X X X Extracts X X X X ..... tted, the order granting the facility of payment by installments would become infructuous. Once the order granting the facility of deferred payment of tax becomes infructuous, the amount that remains unpaid automatically gets restored to the status of a tax. As a consequence, Section 22(2) would come into play, imposing a liability upon the dealer to pay interest on the amount due at a rate statutorily fixed. It is of relevance to point out that the liability to pay interest arising under Section 22(2) is not merely on tax. The invocation of Section 25 of the Act for the recovery of interest on the amount remaining unpaid under a deferment scheme, as if it were an arrear of land revenue, is clearly borne out by the provision itself. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue Recovery Act, 1864, the petitioner has come up with the above writ petition. 2. Heard Mr. S. Krishna Murthy, learned counsel for the petitioner. Mr. Shaik Jeelani Basha, learned Special Standing Counsel takes notice for the respondents 1 and 2. 3. The petitioner is a dealer under the A.P. VAT Act, 2005 on the rolls of the 1st respondent. In terms of G.O.Ms.No.108, the petitioner was granted industrial incentive in the form of sales tax deferment for a period of 10 years commencing from 01.04.1993 to 31.03.2002. 4. Admittedly the petitioner committed default in making payment of the installments, forcing the authorities to issue show cause notices for the levy of interest on the belated payment of installments. The show cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. 8. In order to understand the reach of the first two contentions of the learned counsel for the petitioner, we must first take a look at Section 25 of the A.P. VAT Act. It reads as follows: 25. Tax as an arrear of land revenue: If the tax assessed or penalty levied or interest payable under the Act, or any amount of tax including deferred tax which is treated as a loan extended by the Government to the dealer and any installment thereof, are not paid by a dealer within the time specified therefore, the whole of the amount then remaining unpaid may be recovered as if it were an arrear of land revenue 9. As can be seen from the statutory prescription, the whole of the amount remaining unpaid by a dealer, may be recovered as if i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repayment and any other benefits for all units availing tax deferment shall be in the manner prescribed. 12. In exercise of the powers conferred by Section 78 of the Act, the Government of Andhra Pradesh issued the A.P. VAT Rules, 2005. Rule 24 of these rules deals with payment of tax. Sub-rule (5) of Rule 24 specifically deals with deferred payment of tax. Sub-Rule (5) of Rule 24 of the A.P. VAT Rules, 2005 reads as follows: 24 (5): Where any dealer has been permitted to pay tax or any other amount by way of instalments, the following conditions shall apply: a) The dealer shall not default payment of any other taxes or any other amount due under the Act subsequent to the granting of instalments. b) In the event of any default, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtracted above, the liability to pay interest arises whenever a dealer fails to pay the tax assessed or penalty levied or any other amount due under the Act. Therefore, it is not as though the liability to pay interest is correlated only to the tax assessed or penalty levied. It has a correlation even to any other amount due under the Act. The arrears or installments payable under a deferment scheme would fall under the category of any other amount due under the Act mentioned in Section 22 (2), especially on account of Rule 24 (5) (b) of the Rules. 15. Hence, the invocation of Section 25 of the Act for the recovery of interest on the amount remaining unpaid under a deferment scheme, as if it were an arrear of land revenue, is clearly bor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted out earlier, the said contention also overlooks the prescription contained in Rule 24 (5) (b) read with Section 69 (3), which makes the facility of payment by installments as infructuous, the moment a default is committed. Once the contract becomes infructuous, the deeming fiction disappears, restoring the status of tax to the amount earlier treated as deemed to have been paid. A deeming fiction will have to disappear in the face of a hard fact. Take for instance a case, where a person is deemed to be dead, in terms of section 108 of the Evidence Act, the moment the person appears, the deeming fiction will disappear. It is only on account of this consequence that the liability to pay interest is fastened under Section 22(2) not merely o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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