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of <h1>Nylon tyre cord fabric sales taxed under Rajasthan Sales Tax Act. Interest on delayed payment applicable.</h1> <h3>JK. Synthetics Ltd. and Another Versus Commercial Taxes Officer and Another</h3> The Tribunal upheld the assessing authority's decision that the sales of nylon tyre cord fabric were taxable under the Rajasthan Sales Tax Act as the ... - Issues Involved:1. Taxability of intra-State sales under the Rajasthan Sales Tax Act (RST Act).2. Levy and recovery of interest under section 11B of the RST Act.Detailed Analysis:Issue 1: Taxability of Intra-State SalesThe central issue in this writ petition is whether the sales of nylon tyre cord fabric by the petitioner company ('the Co.') during the period January 1, 1979, to December 31, 1979, are subject to tax under the RST Act. The assessing authority (AA) issued an assessment order on April 1, 1983, holding that the turnover of Rs. 3,09,89,382 was exigible to tax at 4 percent, resulting in a tax liability of Rs. 12,39,575.28. The Co. claimed exemption under a State Government notification dated March 5, 1973.The AA argued that to benefit from the exemption, additional excise duty must be leviable and actually paid, which was not the case here. The Co. represented its product as unprocessed tyre cord fabric/warp sheet, making it non-eligible for the exemption as per the proviso of the March 5, 1973, notification. The Tribunal referred to several notifications and the Supreme Court's decision in Delhi Cloth & General Mills Co. Ltd. v. State of Rajasthan [1980] 46 STC 256, which clarified that after March 5, 1973, exemption was conditional on the payment of additional excise duty.The Tribunal concluded that the Co.'s product did not meet the exemption criteria since no additional excise duty was paid. Therefore, the AA correctly assessed the sales as taxable under the RST Act.Issue 2: Levy and Recovery of InterestThe second issue concerns the levying of interest under section 11B of the RST Act. The Co. contended that interest should only be charged from the date of quantification of the demand. The Supreme Court's decision in J.K. Synthetics Ltd. v. Commercial Taxes Officer [1994] 94 STC 422, which overruled an earlier decision in Associated Cement Co. Ltd. v. Commercial Tax Officer [1981] 48 STC 466, was cited. The Supreme Court held that interest could only be charged for the period subsequent to the final assessment and after the expiry of the notice of demand.The Tribunal noted that section 11B of the RST Act underwent significant changes effective April 7, 1979. For sales after this date, interest is chargeable from the date the tax became payable until it was paid. The AA had not levied interest in the impugned order but had raised the issue for separate determination after considering the Co.'s representation. The Tribunal emphasized that interest is chargeable for delayed payment of tax, not for deposits collected for possible contingencies.The Tribunal concluded that the AA should determine the interest liability in accordance with the law, considering the Supreme Court's rulings and the Tribunal's observations.Conclusion:The Tribunal dismissed the writ petition, upholding the AA's assessment order regarding the taxability of the sales and directing the AA to determine the interest liability in accordance with the law. No order as to costs was made.
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