1999 (4) TMI 519 - SC - VAT / Sales Tax

Clause (a) of s.21(3-D) excludes s.21(5) for sugarcane tax; interest cannot be levied under r.45(4)

VVS. Sugars Versus Government of Andhra Pradesh and Others

SC held that clause (a) of s.21(3-D) as amended excludes application of s.21(5) to tax on sugarcane purchases with effect from the amending Act's ... Interpretation of section 21 of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961, as amended by Act 25 of 1976 - interest levied on arrears of tax under sub-rule (4) of rule 45 of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Rules, 1961. Held that:- On the plain wording of clause (a) of sub-section (3-D) of section 21 of the Act as amended, we find it difficult to agree with the High Court. The provisions thereof say that sub-section (5) shall not apply in relation to tax levied under sub-section (1) of section 21 on purchase of sugarcane. The provisions came into force on the date of the commencement of the amending Act. The provisions are open ended and are intended to apply upon the commencement of the amending Act with no limitation in time. This Court in India Carbon Ltd. v. State of Assam [1997 (7) TMI 566 - SUPREME COURT] has held, after analysing the Constitution Bench judgment in J.K. Synthetics Ltd. v. Commercial Taxes Officer [1994 (5) TMI 233 - SUPREME COURT], that Interest can be levied and charged on delayed payment of tax only if the statute that levies and charges the tax makes a substantive provision in this behalf. There being no substantive provision in the Act for the levy of interest on arrears of tax that applied to purchases of sugarcane made subsequent to the date of commencement of the amending Act, no interest thereon could be so levied, based on the application of the said rule 45 or otherwise. The respondents shall refund the amounts that the appellants have paid within three months from today with interest at the rate of 18 per cent per annum from the date of payment till the refund is made. Issues:Interpretation of section 21 of Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961 as amended by Act 25 of 1976.Levying of interest on arrears of tax under sub-rule (4) of rule 45 of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Rules, 1961.Analysis:1. Interpretation of Section 21: The main issue in this case revolved around the interpretation of section 21 of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961 as amended by Act 25 of 1976. The specific focus was on sub-sections (3-D), (4), and (5) of section 21. The question raised was whether interest could be levied on arrears of tax under sub-section (4) of rule 45 of the Andhra Pradesh Sugarcane Rules, post the said amendments. The appellants argued that sub-section (5) of section 21, which mandated the payment of interest on arrears of tax, was not applicable due to the amendments. The High Court initially held that the scope of sub-section (3-D) was limited to a specific crushing season, but the Supreme Court disagreed.2. Taxing Statute Interpretation: The Supreme Court emphasized that a taxing statute must be interpreted strictly as it reads, without any additions or subtractions based on legislative intent. The Court highlighted the importance of adhering to the plain wording of the statute without imposing limitations based on external factors.3. Application of Amended Provisions: The Court analyzed clause (a) of sub-section (3-D) of section 21 and concluded that the provisions clearly stated that sub-section (5) would not apply to the tax levied under sub-section (1) on the purchase of sugarcane. The provisions were deemed to be open-ended and applicable from the commencement of the amending Act without any temporal restrictions.4. Levy of Interest: Referring to previous judgments, the Court established that interest could only be levied on delayed tax payments if the statute explicitly provided for it. Since there was no substantive provision in the Act for levying interest on arrears of tax for purchases made after the commencement of the amending Act, the Court ruled that no interest could be charged based on rule 45 or any other grounds.5. Final Decision: The Supreme Court allowed the appeals, setting aside the judgments and orders under appeal. It directed the respondents to refund the amounts paid by the appellants within three months with an interest rate of 18% per annum from the date of payment till the refund is made. No costs were awarded in the case.In conclusion, the Supreme Court's judgment clarified the interpretation of the relevant provisions of the Andhra Pradesh Sugarcane Act and Rules regarding the levy of interest on arrears of tax. The Court's decision underscored the importance of strict adherence to the wording of taxing statutes and the necessity for substantive provisions to support the imposition of interest on delayed tax payments.