Case Law Details
Aruna Hotel Limited Vs Assistant Commissioner (ST) (Madras High Court)
Introduction: In a recent judgment, the Madras High Court addressed challenges raised by Aruna Hotel Limited against demands under the Tamil Nadu Value Added Tax Act, Tamil Nadu General Sales Tax Act, and Central Sales Tax Act. The court’s focus was on the levy of interest on belated tax payments and the clarity required in bifurcating interest components.
Detailed Analysis: Aruna Hotel Limited faced demands under TNVAT, TNGST, and CST Acts, challenging notices received after settling admitted tax demands. The assessments, initially set aside, were redone in 2016. The company settled tax demands in full, but a subsequent notice in 2019 imposed interest under Section 42(3) of the TNVAT Act, without issuing a prior show-cause notice.
The court noted that automatic interest applies to admitted tax if not settled with returns. However, the impugned notice failed to distinguish between admitted tax and tax levied on additions. The lack of clarity prompted the court to direct Aruna Hotel Limited to appear before the Assessing Authority for bifurcation and address the challenge.
Regarding the rate of interest, the petitioner could make submissions, and the Assessing Authority would categorize interest on admitted tax and subsequent amounts with the applicable rate. Similar considerations were extended to TNGST and CST matters, awaiting clarity through assessment orders.
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