2019 (8) TMI 1362 - HC - VAT and Sales Tax

Court upholds tax authority actions on REP licenses & sales tax, finding no infirmity.

TVL. K.H. Shoes Ltd. Versus The Joint Commissioner of Commercial Taxes (Revision Petition), The Commercial Tax Officer

TVL. K.H. Shoes Ltd. Versus The Joint Commissioner of Commercial Taxes (Revision Petition), The Commercial Tax Officer - [2020] 76 G S.T.R. 477 (Mad) Issues Involved:1. Levy of interest on tax for the sale of REP licenses.2. Applicability of interest on additional sales tax.3. Validity of tax assessment and interest levied post-judgment by the Supreme Court.Issue-wise Detailed Analysis:1. Levy of Interest on Tax for the Sale of REP Licenses:The petitioner, a dealer in hides, skins, and shoe uppers, contested the levy of interest on tax for the sale of REP licenses during the assessment years 1993-94 and 1994-95. The petitioner argued that since they reported the turnover and paid the tax within the due date after the revision of assessment, interest should not be levied. The petitioner relied on the Supreme Court decisions in M/s. J.K. Synthesis Limited and M/s. EID Parry (India) Limited, which held that interest is not payable if the tax is paid within the due date after the final assessment. However, the court noted that the liability to pay tax on REP licenses was established by the Karnataka High Court and affirmed by the Madras High Court in P.S. Apparels' case. The interim stay by the Supreme Court only delayed the assessment but did not negate the liability. The court concluded that the petitioner was liable to pay interest from 01.05.1996, the date when the Supreme Court affirmed that REP licenses constitute goods.2. Applicability of Interest on Additional Sales Tax:The petitioner argued that interest on the belated payment of additional sales tax was not warranted in the absence of an express provision under the Tamil Nadu Additional Sales Tax Act. The court rejected this contention, citing the amendment to the Tamil Nadu Additional Sales Tax Act, which provided for the levy of interest on additional sales tax. The court also referenced the Supreme Court's decision in Indodan Industries Limited, which upheld the validation of actions under the amended Act, including the levy of interest on additional sales tax.3. Validity of Tax Assessment and Interest Levied Post-Judgment by the Supreme Court:The petitioner contended that the assessment and demand for tax on REP licenses, and the subsequent interest levied, were not valid as the assessments were made after the Supreme Court's judgment. The court noted that the liability to pay tax on REP licenses existed during the original assessment period, and the interim stay by the Supreme Court only temporarily halted the assessment process. The court found that the revisional authority correctly levied interest from 01.05.1996, the date of the Supreme Court's judgment in Vikas Sales Corporation, affirming that REP licenses constitute goods. The court also referenced the Supreme Court's decision in Calcutta Jute Manufacturing Company, which held that interim orders do not absolve the liability to pay interest on delayed tax payments.Conclusion:The court dismissed the writ petitions, upholding the orders of the first respondent. The court found no infirmity in the levy of interest on the tax for the sale of REP licenses and the additional sales tax, validating the actions taken by the tax authorities post the Supreme Court's judgment. The court emphasized that the liability to pay tax and interest was consistent with the established legal position and the amendments to the relevant tax laws.