1999 (3) TMI 602 - HC - VAT and Sales Tax

Supreme Court: Agarbathies /= Perfumes for Sales Tax. No Interest on Excess Tax. Statutory Provisions Govern.

Ambica Chemicals Products Versus Commercial Tax Officer, Eluru, WG. Dist. and Another

Ambica Chemicals Products Versus Commercial Tax Officer, Eluru, WG. Dist. and Another - [1999] 114 STC 88 (AP) Issues:1. Assessment of sales tax on 'agarbathies' as perfumes.2. Claim for interest on excess amount of sales tax collected and retained by the authorities.Issue 1: The petitioner-firm manufactured 'agarbathies' and was assessed for sales tax under the Andhra Pradesh General Sales Tax Act, 1957. The authorities classified 'agarbathies' as 'perfumes' and levied tax at 10%. The petitioner challenged this classification, leading to a series of legal actions. The Supreme Court, in a judgment, held that 'agarbathies' cannot be classified as 'perfumes' and that tax at 10% was invalid. The Appellate Deputy Commissioner subsequently ordered refunds for the petitioner for the assessment years in question, which were adjusted against subsequent tax payments. The petitioner contended that interest should be paid on the excess tax amount collected and retained by the authorities. The court noted that the Act did not provide for interest in such cases and emphasized strict interpretation and application of tax laws. The court held that since the petitioner's claim did not fall under the specified provisions entitling interest, no additional interest could be awarded based on equity or good conscience. The court dismissed the petitioner's claim for interest based on the statutory framework and lack of legal basis for the claim.Issue 2: The petitioner argued that interest should be paid on the excess tax amount collected and retained by the authorities, citing equity and equality of treatment between parties in tax matters. The court, however, emphasized the need for specific statutory provisions for the payment of interest in tax refund cases. The court highlighted that the Act only allowed interest under certain circumstances outlined in sections 33-E and 33-F. Since the petitioner's claim did not fall within these sections, the court rejected the claim for interest based on equity alone. The court held that the statutory framework did not support the petitioner's claim for interest beyond what was provided for in the Act. Additionally, the court noted that the provisions of the Interest Act, 1978 did not justify the exercise of powers under the Constitution. Ultimately, the court found no merit in the petitioner's claim for interest and dismissed the writ petition without any order as to costs.