Court rules in favor of petitioner, quashing interest demand on disputed tax amount

The court ruled in favor of the petitioner, quashing the demand for interest on the disputed tax amount for the specified period. The court found that the petitioner had filed the cheque for the admitted tax within the required time, and the department's claim of non-encashment was contradicted by evidence from the bank. Emphasizing the department's duty to follow proper procedures and notify the petitioner about cheque status, the court held that the demand for interest was unjustified, citing previous judgments supporting the petitioner's position.

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Issues:
Challenge of demand of interest for not depositing admitted tax for 3rd quarter of assessment year 1981-1982.

Analysis:
The petitioner, a registered dealer under the U.P Sales Tax Act and Central Sales Tax Act, contested the demand of interest for not depositing the admitted tax for the 3rd quarter of the assessment year 1981-1982. The assessing authority noted a missing challan for a certain amount and required the petitioner to provide a bank certificate if the amount had been recovered. The petitioner subsequently deposited the amount, but the department claimed it was not deposited along with the returns, leading to the demand for interest. The petitioner argued that the cheque was filed with the return, and any fault in non-encashment lay with the department. The department contended that since the cheque was not encashed, the petitioner was liable to pay interest.

Upon reviewing the submissions and evidence, the court found that the cheque for the admitted tax amount was indeed filed by the petitioner within the stipulated time. The department stated that the cheque was presented but not encashed, without providing further details or evidence. However, a certificate from Punjab National Bank confirmed that the cheque was not presented for payment, contradicting the department's claim. The court emphasized that the department failed to inform the petitioner about the cheque status, as required.

The court referenced a Division Bench decision and highlighted the obligation of the department to follow proper procedures for cheque deposit and notification to the dealer if not encashed. Relying on previous judgments, the court concluded that the demand for interest was unjustified in this case. The court held in favor of the petitioner, quashing the notice demanding interest on the disputed amount for the specified period. The judgment favored the petitioner, emphasizing the department's responsibility and rejecting the demand for interest due to the department's failure to follow proper procedures and notify the petitioner about the cheque status.

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