Court Upholds Interest on Tax Payments, Grants Liberty to Challenge Calculation

The court dismissed the writ petition, affirming the statutory obligation to pay interest on delayed entry tax payments. The recovery notice demanding interest was upheld, and the petitioner was granted the liberty to raise objections regarding the interest calculation before the concerned authority. The judgment emphasized the automatic nature of interest liability under the statute, irrespective of specific directions in the assessment order.

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Issues Involved:
1. Liability to pay interest on delayed payment of entry tax.
2. Validity of the recovery notice demanding interest.
3. Applicability of VAT Act provisions to the Entry Tax Act.
4. Requirement of assessment order to specify interest liability.
5. Right to appeal against the interest calculation.

Detailed Analysis:

1. Liability to Pay Interest on Delayed Payment of Entry Tax:
The primary issue is whether the petitioner is liable to pay interest for the delay in making the payment of entry tax, despite the absence of such a direction in the assessment order. The court noted that the petitioner deposited Rs. 1,76,75,224/- on 3.1.2012, which was due by 1.10.2010, resulting in a delay of about 15 months. According to Section 33 of the U.P. VAT Act, which applies mutatis mutandis to the Entry Tax Act, the petitioner is liable for interest on delayed payments. The Supreme Court in *Haji Lal Mohd. Biri Works* and *Pepsico India Company Limited* established that liability to pay interest is automatic and arises by operation of law, irrespective of the assessment order's silence on this matter.

2. Validity of the Recovery Notice Demanding Interest:
The petitioner challenged the recovery notice demanding Rs. 33,36,199/- as interest for the delayed payment. The court held that the liability to pay interest is statutory and automatic for delayed payments, and thus, the department is justified in issuing the recovery notice. The court referenced *Commissioner of Sales Tax Vs. Qureshi Cruchible Center* and *Kalyan Kumar Ray Vs. Commissioner of Income Tax* to support the view that interest liability does not require a specific direction in the assessment order.

3. Applicability of VAT Act Provisions to the Entry Tax Act:
Section 13 of the Entry Tax Act makes certain provisions of the VAT Act applicable to proceedings under the Entry Tax Act, including Sections 31 and 33. Section 33 details the procedure for payment and recovery of tax, including interest on unpaid amounts. The court confirmed that these provisions apply to the Entry Tax Act, thereby validating the demand for interest on delayed payments.

4. Requirement of Assessment Order to Specify Interest Liability:
The court clarified that there is no specific provision or power conferred upon the Assessing Officer to determine the amount of interest payable on delayed entry tax payments. The liability to pay interest is embedded in the statute itself. The court cited *Kalyan Kumar Ray* and *Commissioner of Income Tax Vs. Bhagat Construction Company Private Limited* to emphasize that the assessment order need not contain a specific direction for interest payment, as the statutory obligation suffices.

5. Right to Appeal Against the Interest Calculation:
The court acknowledged that while the liability to pay interest is automatic, it is prudent for the department to provide detailed tax calculations as part of the assessment order to enable the assessee to file a proper appeal if needed. The petitioner is entitled to raise objections regarding the interest calculation before the concerned authority. The court granted the petitioner the liberty to challenge the interest calculation if it was not provided or if disputed, ensuring that the right to appeal is preserved.

Conclusion:
The court dismissed the writ petition, affirming the statutory obligation to pay interest on delayed entry tax payments. The recovery notice demanding interest was upheld, and the petitioner was granted the liberty to raise objections regarding the interest calculation before the concerned authority. The judgment emphasized the automatic nature of interest liability under the statute, irrespective of specific directions in the assessment order.

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