Deputy Commissioner (CT), Madurai Division vs R.S. Granites and Another

K. Raviraja Pandian, J.—In this writ petition the correctness of the order passed by the Tamil Nadu Taxation Special Tribunal is put in issue. By the impugned order, the Tamil Nadu Taxation Special Tribunal set aside the order passed by the petitioner in his proceedings dated October 29, 2002 non-suiting the first respondent for making an application u/s 5 of the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 and further directed the petitioner to take the application of the first respondent on file and proceed further in accordance with law.

The facts which culminated in filing of this writ petition are as follows:

The first respondent was a dealer in granite. For the assessment year 1993-94, the assessing officer passed a revised assessment order disallowing the claim of exemption of export sales to the tune of Rs. 10,22,461. As a result of such revision of assessment, the first respondent has to pay tax of Rs. 81,797, surcharge of Rs. 12,270, additional sales tax of Rs. 337, and penalty of Rs. 1,41,606. The said revisional order has been passed on October 31,1995. The assessee preferred an appeal to the first appellate authority, Appellate Assistant Commissioner in A. P. No. 755 of 1995, who held that in the process of export of granite blocks, there involved no manufacturing activity in polishing the rough stone granite and inasmuch as no new commercial commodity came into existence, the first respondent is entitled to claim exemption. On that reasoning, the appeal was allowed. The Joint Commissioner, Commercial Taxes (suo motu revision) had issued a show cause notice proposing to revise the orders of the Appellate Assistant Commissioner, Madurai, calling upon the first respondent to explain as to why the appellate order holding that the assessee was entitled to exemption should not be revised by invoking the suo motu revisional power. The assessee have also filed their objection and the revision is pending consideration before the Joint Commissioner. While that being so, the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 (hereinafter referred to as, "the 2002 Act") came to be enacted and the first respondent/ assessee opted to settle the dispute in terms of the said Act and made an application for settlement u/s 5 of the 2002 Act. The said application was rejected by the petitioner, the designated authority under the Act by his order dated October 29, 2002 to the effect that there was no provision available under the Samadhan Scheme to entertain the application in respect of suo motu revision cases. Questioning the correctness of the order of the petitioner, the assessee-first respondent filed O.P. No. 1089 of 2002 before the Tamil Nadu Taxation Special Tribunal, which by its order dated June 18, 2003 set aside the order of the petitioner dated October 29, 2002 and directed the petitioner to entertain the application.

The learned Government Pleader appearing for the petitioner submitted that as per the provisions of the 2002 Act, the condition precedent for entertaining the appeal is that an appeal or revision has to be pending on the crucial date of February 28, 2002. The revision pending in this case was not the one filed by the first respondent-assessee. On the contrary, it was the revision taken by the Joint Commissioner invoking his suo motu power. Hence, the order of the designated authority is correct. The Special Tribunal went in a wrong tangent and granted the relief. He further contended that as the first respondent-assessee has succeeded before the first appellate authority there is no liability to pay any tax or penalty and as such, the first respondent cannot be regarded as an aggrieved person. In the absence of any tax liability on the part of the first respondent-assessee, the assessee cannot maintain an application under the provisions of the "2002 Act" for settlement of dispute. Hence, the order of the designated authority in non-suiting the assessee for settlement of dispute is correct. The order of the Special Tribunal is against the very scheme of the Act. However, learned Counsel for the first respondent-assessee argued for sustaining the impugned order of the Special Tribunal.

We heard the learned Counsel on either side and perused the materials available on record.

Section 4 of the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 reads as follows:

Eligibility for settlement.--(1) Subject to the other provisions of the Act, an applicant may make an application for settlement of arrear of tax, penalty or interest in dispute in respect of any period for which an assessment has been made under the relevant Act, -

(i) against which an appeal or revision has been filed on or before the 28th day of February, 2002 before any appellate authority or revisional authority, as the case may be, and pending before such authority on or before the date of making an application u/s 5;

(ii) against which an order in appeal or revision is received by the dealer on or before the 15th day of February, 2002 and further appeal or revision is filed and pending before making an application u/s 5.

Explanation.--For the purpose of this Act, appeal or revision shall not include writ or writ appeal.

(2) Notwithstanding anything contained in Sub-section (1), an applicant shall not be eligible to make an application for settlement of arrear of tax, penalty or interest in dispute in respect of any period under the relevant Act for which the appeal or revision has been finally heard by the appellate authority or the revisional authority, as the case may be.

As per Clause (i) of Sub-section (1) of Section 4 of the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002, pre-requisite for filing an application u/s 5 of the Act is that as against the assessment order passed under the Tamil Nadu General Sales Tax Act, 1959 or the Central Sales Tax Act, 1956 the appeal or revision should have been filed on or before February 28, 2002 before any appellate authority or revisional authority as the case may be, and it should be pending before the authority on or before the date of making the application u/s 5 of the "2002 Act". The terminology "appeal or revision" used in that provision did not distinguish the appeal or revision filed by the assessee as against the appeal or revision initiated by the State. Pendency of appeal or revision before the appellate authority is the only pre-requisite but at whose instance the appeal or revision was pending cannot be regarded as a pre-requisite, on a reading of Sub-section (1)(i) of Section 4.

The other contention that when there was no tax liability on the part of the first respondent-assessee since the first appellate authority has granted the relief in his favour and thus he is not entitled to invoke the provisions of the 2002 Act, also cannot be accepted. It is true that the first respondent has succeeded before the first appellate authority, but the matter did not end there. The Joint Commissioner initiated a suo motu revision questioning the correctness of the order passed by the first appellate authority. In the event of the State succeeding in the revision, the assessee has to pay the tax, other components and penalty as per the decision of the revisional authority. The first respondent, in order to avoid hassle, filed an application u/s 5 of the Act and offered to pay 50 per cent of the disputed amount in the revision which is in a way favourable to the State also.

The Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 came to be enacted for the purpose of expeditious settlement of disputes relating to arrears of tax, penalty or interest pertaining to sales tax by giving substantial relief for the assessee to settle the matter. As stated already, even though the first respondent-assessee has succeeded before the first appellate authority because of the fact that the revision is pending at the instance of the State before the Joint Commissioner, the assessee, in order to avoid further conflict or further dispute, is entitled to file an application u/s 5 of the 2002 Act as the first respondent-assessee is fulfilling the requirement u/s 4 of the "2002 Act". Hence, the petitioner has not made out any case for interference with the order of the Special Tribunal. The writ petition is dismissed. No costs. The connected miscellaneous petition is consequently dismissed.