2004 (4) TMI 557 - AT - VAT and Sales Tax

Tribunal clarifies interest calculation rules: Demand notice, not return filing date, triggers interest accrual.

The tribunal set aside the revisional order challenging interest calculation under section 31 of the Act, 1994, ruling that interest should only accrue ... - Issues:Challenge to revisional order for interest calculation under section 31 or section 32 of the Act, 1994.Analysis:The petitioner challenged a revisional order dated January 27, 2004, seeking to set aside the interest charged by the respondent No. 2 under section 31 of the West Bengal Sales Tax Act, 1994. The petitioner argued that interest should have been calculated only from the expiry date mentioned in the demand notice, as there was no deliberate intention to suppress sales. The petitioner contended that section 32, which deals with revisional orders after assessment, should apply instead of section 31. On the other hand, the respondents justified the interest levy under section 32, citing that the petitioner deliberately suppressed sales to evade tax liability. The central issue for consideration was whether interest should be levied under section 31 or section 32 of the Act, 1994.The tribunal delved into the provisions of section 31, which pertain to interest for non-payment or delayed payment of tax before assessment. It was emphasized that interest under section 31 is triggered on the last date prescribed for payment, irrespective of the return filing date. Referring to legal precedents, the tribunal highlighted that interest is due based on the tax payable according to the returns filed, and a dealer cannot be expected to predict the final assessment outcome. In this case, the assessment was completed based on the filed returns, and any interest under section 31 should be charged from the last date of filing returns.Regarding section 32, which addresses liability for payment post-assessment, the tribunal emphasized that interest accrues after the specified period in the demand notice, not from the return filing date. Legal principles were cited to support the view that interest under section 32 is substantive and not a machinery provision. The tribunal concluded that interest in this case should only be charged after the service of the demand notice, rendering the impugned order unsustainable under law.In light of the above analysis, the tribunal set aside the impugned order and directed the Deputy Commissioner to act in accordance with the law. The application was allowed without costs, with the technical member concurring with the decision.