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Judgment
S. Manikumar, J.—The petitioner was an assesses on the file of the second respondent, the Deputy Commercial Tax Officer, Guindy Assessment Circle, till 1997. Due to labour unrest and the financial constraint, the petitioner had closed down their business activities in the year 1998 and not renewed the Sales Tax Registration. The petitioner's sister company also faced the same problem. The enforcement wing officials of the Commercial taxes Department, inspected the petitioner's premises on 03.11.1999 and verified the books of accounts. In the year 2001, the business premises were locked and sealed by the Official Liquidator. After 2002, the petitioner was able to recover some amount and started paying the Government dues. On the basis of inspection, the assessment order for the year 1999-2000 was passed on 31.03.2003 and the writ petition challenging the said assessment order was dismissed by this Court on the ground there was no violation of the procedure.
The petitioner has further submitted that the Government of Tamil Nadu introduced Samadhan Scheme in the year 2006, for settlement of arrears of sales tax. The petitioner filed an application dated 29.12.2006 before the Designated Authority/first respondent by making necessary payments. The application filed on 29.12.2006 was returned on 27.02.2007 on the ground it is not entertainable. The petitioner represented and filed a detailed reply on 27.03.2007 and requested opportunity of hearing before passing orders on the application. But without granting an opportunity, it was returned by the Designated Authority, as not entertainable. Aggrieved by the same, the petitioner has filed this writ petition.
Learned Counsel for the petitioner submitted that the inspection was conducted on 03.11.1999 by the Enforcement Wing Officials and the words ""arrears of tax accrued upto 31st day of March 2001"" mentioned in Section 2 of the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2006 (in short referred to as "the Act") relate back to the date of inspection from the date when the ''lis'' had commenced and therefore, the order of the respondent returning the application preferred by the petitioner for availing the Samadhan Scheme is liable to be set aside. He further submitted that the accrual of arrears refers to the assessment year 1999-2000 and therefore, all the cases where the arrears, tax, penalty due to be paid for the assessment years upto 2000-01 are eligible, for consideration.
Referring to Section 8(2) of the Act, learned Counsel for the petitioner submitted that the impugned order is violative of the principles of natural justice, as the respondent has failed to grant him an opportunity before refusing to settle the arrears.
In response to petitioner's contentions, Mr. R. Mahadevan, learned Additional Government Pleader, submitted that the words figuring in Section 2(1)b of the Act, i.e., ""Arrears of tax, penalty and interest payable by the applicant arises only upon assessment therefore, the date of passing the assessment order is the consideration and not the assessment year or the date of inspection by the enforcement officials. He further submitted that only the amount has to be quantified and the arrears of tax, penalty, interest accrued upto 31st March 2001 alone can be considered by the Designated Authority under the Act and any arrears of tax, penalty etc., determined after 31.03.2001, cannot be settled under the Act. Under such circumstances, the application cannot be entertained and in which event, no opportunity need be given to the applicant.
Before dealing with the factual matrix, it is relevant to extract the provisions dealing with the scheme under the Act. Section 2(1)(b) of the Act reads as follows:
(b) arrears of tax, penalty or Interest"" means,-
(i) tax include additional sales tax, surcharge, additional surcharge and Central Sales Tax, payable by an applicant upon assessment under the relevant Act.
(ii) penalty payable by an applicant under the relevant Act, or
(iii) interest payable by an applicant under the relevant Act, as the case may be, other than the dues as per the return, accrued upto the 31st day of March 2001 under the relevant Act, and pending collection on the date of filing of application under this Act;
Section 7 of the Act is extracted below:
Rate applicable in determining amount payable-
(a) Where it relates to arrears of tax with corresponding arrears of penalty and interest accrued upto the 31st March, 1991, if the dealer pays the entire arrears of tax pending collection on the date of application, the balance of the entire penalty and interest shall be waived;
(b) Where it relates to arrears of tax with corresponding arrears of penalty and interest accrued between the 1st day of April 1991 and the 31st day of March 2001, if the dealer pays the entire arrears of tax due along with ten per cent of penalty and twenty five per cent of interest pending collection on the date of application, the balance of ninety per cent of penalty and seventy-five per cent of interest shall be waived;
(c) Where it relates to arrears of penalty or interest or both accrued up to the 31st day of March 2001, and where there is no corresponding arrears of tax pending collection on the date of application, if the dealer pays ten per cent of penalty and twenty-five per cent of interest, the balance of ninety per cent of penalty and seventy-five per cent of interest shall be waived.
Section 8 of the Act reads as follows:
Settlement of arrears and issue of certificate:
(1) The designated authority, shall on being satisfied about the payment of the amount determined under Sub-section (1) of Section 6, by an order, settle the arrears of tax, penalty or interest and issue a certificate in such form as may be prescribed, and thereupon, the applicant shall be discharged from his liability to make payment of the balance amount of such arrears of tax, penalty or interest. Separate certificate shall be issued in respect of each application.
(2) The designated authority, for reasons to be recorded in writing, may refuse to settle the arrears of tax, penalty or interest:
Provided that no order under this sub-section shall be passed without giving the applicant a reasonable opportunity of showing cause against such refusal.
(3) The authority notified by the Government in this behalf may, at any time within ninety days from the date of issue of certificate under Sub-section (1) by the designated authority modify the certificate by rectifying any error apparent on the face of the record:
Provided that no such rectification adversely affecting the applicant shall be passed without allowing the applicant a reasonable opportunity of showing cause against such rectification.
The expression "upon assessment" in Section 2 means determination of the turnover for the purpose of levying tax and its authoritative imposition of tax to be paid.
In interpreting a section in a taxing statute, according to Lord Simonds in St. Aubyn (L.M.) v. A.G. reported in 1951 (2) All.E.L.R. 473, "the question is not at what transaction the section is according to some alleged general purpose aimed, but what transaction its language according to its natural meaning fairly and squarely hits". Lord Simonds call this "the one and only proper test".
In Inland Revenue Comrs. v. Wolfson reported in 1949 (1) All.E.L.R. 865, the same learned Judge held that it is not the function of a court of law to give to words a strained and unnatural meaning to cover loopholes through which the evasive tax-payer may find escape or to tax transactions which, had the legislature thought of them, would have been covered by appropriate words.
Courts have consistently held that in construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law. A conjoint reading of the provisions of Section 2 and Section 8 of the Act, clearly shows that the authority constituted for the purpose of settlement of arrears of tax, interest or penalty under the Act can settle the arrears accrued from 1st April 1991 to 31st March
2001. The words used in Section 2(iii) of the Act, accrued upto 31.03.2001 should be read in conjunction with the words "upon assessment", in Section 2(i) of the Act, which means, the date on which, the arrears of tax, penalty or interest is assessed and determined and does not referable to assessment year. It is settled position that any tax, penalty or interest payable, as the case may be, under the relevant Act, would be determined only upon the assessment of the turnover. In the instant case, the assessment order was passed on 31.03.2003 and therefore, the samadan scheme cannot be made applicable.
The next contention of the learned Counsel for the petitioner is that the respondent ought to have given the petitioner an opportunity of being heard.
As per Section 8(2) of the Tamil Nadu Tax (Settlement of arrears) Act, 2006, Designated Authority for the reasons to be recorded, may refuse to settle the arrears of tax, penalty or interest;
Provided that, no order under this sub-section shall pass without giving, the applicant a reasonable opportunity of showing cause against such refusal.
The assessment has been finalized only on 31.03.2003 and the benefit of the Scheme cannot be extended to the petitioner. Strictly speaking it is not necessary to provide any opportunity to the petitioner. The application dated 29.02.2003 received from the petitioner under the new Samadhan Scheme was returned and thereafter, it was re-submitted along with a letter dated 27.03.2003, wherein, the petitioner has contended that though the demand was originally raised by the Enforcement Wing Officials on 03.11.1999, the assessment order was passed belatedly and therefore, the arrears of tax has to be reckoned for the assessment year 1999-2000. The contention of the petitioner has been examined and the respondent having found that the assessment order was passed which was later than the crucial date fixed by the Government, has returned the application as not maintainable.
Since the application dated 29.12.2006 submitted by the petitioner itself does not satisfy the pre-requisite condition of Section 2 of the Tamil Nadu (Settlement of arrears) Act, 2006, it is not necessary to provide reasonable opportunity. Under such circumstances, there is no violation of the principles of natural justice. In view of the above, both the grounds raised by the petitioner are not tenable and the writ petition is liable to be dismissed. No costs. Consequently, connected Miscellaneous Petition is also closed.