Interest u/s 10A Payable Despite Interim Relief When Turnover Tax Omitted From Return u/s 10

SC dismissed the appeals, holding the assessee liable to pay interest under Section 10A of the Bengal Finance (Sales Tax) Act, 1941 on the turnover tax, notwithstanding interim orders of the HC restraining recovery. Since the assessee failed to disclose the relevant turnover and tax in its return, it was deemed to have failed to furnish the "full and correct" return under Section 10, triggering interest liability from the prescribed due date upon completion of assessment under Section 11. The period covered by the HC's interim orders did not suspend accrual of interest, applying the maxim actus curiae neminem gravabit, as the assessee retained and profited from tax amounts that should have gone to the State.

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Issues Involved:
1. Liability to pay interest under Section 10A of the Bengal Finance (Sales Tax) Act, 1941, on turnover tax during the period of High Court's injunction.
2. Validity of the returns filed by the appellants.
3. Applicability of interest under Section 10A for non-payment of tax due to High Court's injunction.

Detailed Analysis:

1. Liability to Pay Interest Under Section 10A:
The primary issue in these appeals is whether the appellants are liable to pay interest under Section 10A of the Bengal Finance (Sales Tax) Act, 1941, on the turnover tax for the period during which the recovery of the tax amount was stopped by orders of the High Court. The West Bengal Taxation Tribunal answered this question against the appellants, leading to these appeals by special leave.

2. Validity of the Returns Filed by the Appellants:
The appellants argued that since they had furnished returns and paid full tax as per such returns, they were not liable to pay interest under Section 10A. The Tribunal pointed out that the appellants had not mentioned the amount of turnover or the tax payable thereon in the returns filed by them. Consequently, they failed to furnish a return "referred to in Section 10." The Tribunal concluded that this failure triggered the liability to pay interest under sub-section (2) of Section 10A from the date prescribed for furnishing the correct return.

3. Applicability of Interest Under Section 10A for Non-Payment of Tax Due to High Court's Injunction:
The appellants contended that they were not liable to pay interest on the tax amount because its non-recovery was due to the High Court's injunction order. The Tribunal, however, emphasized that the State should not suffer due to the delay caused by the taxpayer in paying the tax. The provision for charging interest was introduced to compensate the State for the loss occasioned due to the delay in paying the tax.

The Tribunal referred to the decision in J.K. Synthetics Ltd. v. Commercial Taxes Officer, where it was held that so long as the assessee pays the tax due based on the information supplied in the return filed by him, there would be no default on his part. However, the Tribunal distinguished the present case from J.K. Synthetics Ltd., noting that here, the appellants never disputed their liability to pay tax on the turnover under Section 6B of the Act, even while they challenged the vires of that provision.

The Tribunal further observed that the tax amount should have been paid as per Section 6B remained with the appellants during the entire period, and they would have earned a profit with that amount. The State was unable to utilize it for public purposes. The Tribunal reiterated the principle that no act of the Court shall cause prejudice to any party, encapsulated in the maxim "actus curiae neminem gravabit."

The Tribunal concluded that the High Court's interim orders restraining the State from recovering the tax amount could not deprive the State of its statutory right to interest under Section 10A. The presumption of the constitutionality of a legislative act was emphasized, and the Tribunal dismissed the appeals, concurring with the view taken by the West Bengal Taxation Tribunal.

Conclusion:
The Supreme Court upheld the West Bengal Taxation Tribunal's decision, confirming that the appellants were liable to pay interest under Section 10A of the Bengal Finance (Sales Tax) Act, 1941, for the period during which the recovery of the tax amount was stopped by the High Court's orders. The appeals were dismissed, affirming the Tribunal's interpretation of the statutory provisions and the principles governing the imposition of interest on delayed tax payments.

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