TMI Blog2021 (3) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industrial Estate, Thirumudivakkam, Chennai 600 044. The appellant applied to the State Industries Promotion Corporation of Tamil Nadu Limited [SIPCOT] for issuance of eligibility certificate under the Sales Tax Deferral Scheme by application dated 30.08.2000. By letter dated 20.05.2002, the SIPCOT intimated the appellant that their application has been favourably considered for issuance of eligibility certificate and requested the appellant to execute the agreement and other document with the Commercial Taxes Department. In terms of the eligibility certificate which was issued on 17.05.2002, the deferral period was from 01.07.2000 to 30.06.2009. The appellant executed an agreement dated 21.06.2002, with the respondent Department for deemed payment of deferred sales tax. The deferral period mentioned in the agreement was from 01.05.2002 to 30.04.2011. One of the condition in the agreement which would be of relevance to decide the dispute on hand is condition Nos.1 and 1a, which reads as follows: 1. The Sales Tax due on the sale of the products manufactured by them in their Factory at Plot No.AC7 AC11, SIDCO Industrial Estate, Thirumudivakkam, Sriperumbudur Taluk, Kancheep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent in the notice dated 29.08.2013 and that it is against the letter and spirit of IFST deferral scheme. After referring to clause 12 of the agreement, the appellant contended that the said clause speaks of taxable turnover not shown or declared and in the appellant's case, it is not a case of non-declaration of taxable turnover in the returns and they are entitled for IFST deferral on the entire tax assessed on the taxable turnover declared in the returns. The appellant placed reliance on G.O.Ms.No.500 Industries (MIG-II) Department dated 14.05.1990. The appellant prayed for reworking the sales tax liability and in anticipation of the re-working with a view to buy peace remitted a sum of ₹ 3,42,701 by cheque dated 03.09.2013 being the balance tax payable as per the notice after deducting the adhoc payment of ₹ 83,35,300/-. After about three months, by notice dated 28.01.2014 the respondent levied penal interest under section 24(3) of the TNGST Act being a sum of ₹ 1,08,88,487/-. 6. On receipt of the notice, the appellant sent their objections dated 14.02.2014 pointing out that they have not been given an opportunity to make their submissions before issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would mean the taxes actually collected during the respective assessment years and erroneously concluded that the appellant is not eligible to avail IFST deferral in respect of transactions where actual collections did not take place. Further, it is submitted that the respondent erroneously held that the deferral scheme would not apply to the amount of differential tax demanded by the authority after the close of the respective financial year. Further, it is submitted that in terms of the agreement, the appellant is eligible for deferral and full tax subject to the ceiling specified in the eligibility certificate, i.e. not exceeding ₹ 1725.46 lakhs. Further by referring to clause 12 of the agreement, it is submitted that the agreement refers to 'taxable turnover not shown or declared' to be ineligible for the deferral, however, in the appellant's case, the sale transactions have been duly declared and the monthly returns have been filed mentioning the transaction as sale against Form C/Form H. Therefore, it is submitted that the appellant is entitled for IFST deferral on the entire tax assessed on the taxable turnover declared in the returns including the turnove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Assessing Officer and partly due to how the appellant assessee understood the issue. The undisputed fact being that the application submitted by the appellant for grant of eligibility certificate was favourably considered by the SIPCOT as duly intimated by letter dated 20.05.2002. The eligibility certificate initially granted was for the period from 01.07.2000 o 30.06.2009. Based on the certificate, the appellant was eligible for deferral of sales tax for a sum not exceeding ₹ 1725.46 lakhs under the deferral scheme for nine years from the month in which the appellant's unit commenced its commercial production, i.e. from 01.07.2000 to 30.06.2009. In terms of clause 5.5, the appellant was required to enter into an agreement with the respondent, which condition was complied with by the appellant and the agreement was signed between the parties on 21.06.2002. We find from the agreement that the deferral period is as follows: Deferral Period Financial year of repayment 01/05/2002 to 31/03/2003 01/05/2011 to 31/03/2012 01/04/2003 to 31/03/2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stand of the respondent hinges upon the interpretation to clause 12, which reads as follows: 12.Tax etc. or penalty levied/leviable on taxable turnover suppression [for the purpose of this clause the term turnover suppressions means the taxable turnover not shown or not declared as such in the monthly returns filed by the party of the second part] are not eligible for the loan scheme. 13. In terms of the above clause, 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 whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollected by the appellant, then it is totally a different matter. This also needs to be decided by interpreting the terms and conditions of the agreement and those in the eligibility certificate. The appellant's case is that the limit mentioned in the eligibility certificate as well as in the agreement is ₹ 1725.46 lakhs and this being mentioned as a eligibility limit, the appellant would contend that they are eligible for the IFST deferral scheme. The respondent without noting the complexity of the matter in a casual manner has dealt with the case resulting in passing of the order/notice impugned in the writ petition. Apart from the objections regarding the sustainability of the stand of the respondent that there is turnover suppression, the appellant without prejudice has also disputed the computation of interest. In spite of objection given by the appellant, the respondent has not considered the same and has not passed any speaking order. In this regard, it is relevant to take note of the stand of the appellant wherein they have stated that they are eligible to take an amount of ₹ 87,39,916/- under the deferral scheme under the reserve amount of ₹ 348 lakhs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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