1996 (3) TMI 497 - HC - VAT and Sales Tax

Court rules against Assistant Commissioner's jurisdiction, quashes interest imposition.

Shetkari Sahakari Sakhar Karkhana Ltd. and Another Versus State of Maharashtra and Others

Shetkari Sahakari Sakhar Karkhana Ltd. and Another Versus State of Maharashtra and Others - [1996] 102 STC 157 (Bom) Issues Involved:1. Jurisdiction of the Assistant Commissioner of Purchase Tax to invoke revisional powers under Section 9 of the Maharashtra Purchase Tax on Sugarcane Act, 1962.2. Legality of the demand for interest contrary to the agreement dated March 1, 1981, between petitioners and the State of Maharashtra.Issue-wise Detailed Analysis:1. Jurisdiction of the Assistant Commissioner of Purchase Tax to Invoke Revisional Powers under Section 9:The petitioners argued that the original orders of assessment passed by the Purchase Tax Officer did not levy any interest under Section 7B of the Maharashtra Purchase Tax on Sugarcane Act, 1962, and never deferred the imposition of interest to any future date. The Assistant Commissioner of Purchase Tax (SC) did not have jurisdiction to invoke the revisional power under Section 9 of the said Act. The petitioners contended that the absence of an order levying interest meant there was no order to revise, making the invocation of Section 9 illegal as it requires the existence of an order to be subject to revision.The court examined Section 7B and Section 9 of the Act. Section 7B stipulates the conditions under which interest can be levied for failure to submit returns or pay the full amount of tax. Section 9 allows the Commissioner or any other prescribed revisional authority to revise any order made under the Act. The court found that for the Assistant Commissioner to exercise jurisdiction under Section 9, there must be an existing order to revise. Since the Purchase Tax Officer did not pass an order levying interest, there was no order to revise, making the actions of the Assistant Commissioner without jurisdiction.The court supported this interpretation by referencing decisions from similar cases under different enactments. In Tata Exports Limited v. State of Maharashtra, the court held that revisional powers could only be exercised to revise an existing order. Similarly, the Madras High Court in Khemchand Rajkumar v. State of Tamil Nadu held that the Board could not levy a penalty in the absence of an order by the assessing authority.The court concluded that the orders of the Assistant Commissioner dated November 5, 1986, and the subsequent orders of the Deputy Commissioner dated October 27, 1987, were without jurisdiction and thus quashed and set aside these orders.2. Legality of the Demand for Interest Contrary to the Agreement:Given the court's conclusion on the first issue, it found it unnecessary to consider the second argument regarding the legality of the demand for interest contrary to the agreement dated March 1, 1981. The petitioners had argued that the agreement and the government resolutions clearly stated that the loan was interest-free, and no interest could be imposed on the petitioners.Conclusion:The writ petition was allowed, and the orders dated November 5, 1986, and October 27, 1987, were quashed and set aside. The court ruled that the Assistant Commissioner of Purchase Tax did not have jurisdiction to impose interest under Section 9 of the Maharashtra Purchase Tax on Sugarcane Act, 1962, in the absence of an original order levying interest by the Purchase Tax Officer. Consequently, the court did not address the second issue regarding the agreement. There was no order as to costs, and the rule was made absolute. The writ petition was allowed.