Statutory interest on omitted turnover tax accrued despite filed returns and stayed recovery under sales tax law.

Section 10A of the Bengal Finance (Sales Tax) Act, 1941 was treated as a machinery provision to ensure timely payment of tax, so "return" was construed as a complete return covering all taxable items. On that basis, dealers who filed returns but omitted turnover tax could not avoid interest liability, and the omission also fell within the provision dealing with failure to furnish a return in respect of that tax. The liability to interest arose by operation of statute from 1 October 1983, and a stay of recovery did not suspend accrual of interest or postpone it until dismissal of the earlier appeals.

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Issues: (i) Whether interest on turnover tax was chargeable under section 10A of the Bengal Finance (Sales Tax) Act, 1941, where the dealers furnished returns but omitted turnover tax from those returns; (ii) Whether, if interest was otherwise chargeable, it could be demanded only from the date on which the earlier appeals were dismissed.

Issue (i): Whether interest on turnover tax was chargeable under section 10A of the Bengal Finance (Sales Tax) Act, 1941, where the dealers furnished returns but omitted turnover tax from those returns.

Analysis: Section 10A was treated as a machinery provision intended to secure timely payment of tax and not as a charging provision to be construed narrowly so as to defeat its purpose. The expression "return" in section 10A(1) was construed to mean a complete return covering all taxable items, because an incomplete return would frustrate the statutory scheme and permit evasion of the interest liability. The omission to show turnover tax in the returns meant that the dealers could not escape the operation of section 10A(1), and in any event the non-disclosure of turnover tax also brought the matter within section 10A(2) as a failure to furnish a return in respect of that tax.

Conclusion: Interest under section 10A was chargeable and the liability could not be avoided by filing returns that omitted turnover tax.

Issue (ii): Whether, if interest was otherwise chargeable, it could be demanded only from the date on which the earlier appeals were dismissed.

Analysis: The liability to pay interest was held to arise from the statute itself and not from the later appellate decision. A stay order only suspended recovery and did not stop the running of interest. Since section 10A came into force with effect from 1 October 1983, the statutory liability accrued from that date and was not postponed until the dismissal of the earlier appeals.

Conclusion: Interest was payable from 1 October 1983 and not merely from 24 February 1988.

Final Conclusion: The challenge to the demand of interest failed, and the applications were dismissed with the ancillary grievance regarding declaration forms left to be considered administratively in the manner indicated.

Ratio Decidendi: For a machinery provision governing interest on tax, the term "return" must be read as a complete and proper return covering all taxable items, and a stay of recovery does not suspend the accrual of statutory interest unless the statute so provides.

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