2025 (12) TMI 1547 - HC - VAT / Sales Tax

VAT on extra-neutral alcohol and spirits collected but not deposited with returns, leading to statutory interest upheld.

The dominant issue was whether statutory interest could be levied when a dealer filed VAT returns for ENA/RS/HBS but did not deposit the admitted VAT ... Levy of Interest - Entitlement of State to impose a condition which is not covered by the statute or the rules - State of Goa has excluded ENA from GST regime, and have agreed to apply CST or VAT regime to ENA - sales of Extra Neutral Alcohol (ENA)/Rectified Spirit (RS)/ High Bouquet Spirit (HBS) - HELD THAT:- As per sub-rule (3) of Rule 24, all payments of tax or any other amount under the Act, shall be made by an e-challan and the dealer shall have the option to effect the payment, either through cash mode or through cyber-treasury or through any electronic system available. Whenever the return is submitted without a copy of e-challan for having paid due or lesser payment of what is due, the Assessing Authority shall issue a notice to the registered dealer for the tax not paid and that is deemed to be a demand notice and within receipt of 30 days, the tax shall be paid along with interest for delayed payment as per the rate provided in clause (a) of sub-section (4) of Section 25. The tax is due on 28th of every month and when return is filed, the Government is not unjustified in saying that the payment of tax must come at the relevant time and if the payment comes after the expiry of the period prescribed, then Government has every right to levy interest. The Petitioner admittedly filed Return/Revised Return, but did not pay the tax and thus, according to us, there is no return in the eyes of law and though the tax has come to the Government belatedly, the interest is leviable. It is not found that because of the uncertainty prevailing, the VAT was not paid, as for the first quarter, the petitioner has paid VAT, but claimed benefit of the uncertainty only for the period in the second tranche. In any case, the petitioner must be conscious of the fact that if it is not paying GST, then the goods must invite VAT and it is specifically informed that the VAT was collected, we see no difficulty why it was not deposited with the Government and in the return, it was shown to be ‘zero’. Thus, as per Section 25 and the sequence of events, the tax was due and payable when the return is filed, and in any case, though he was not liable to pay VAT @ 22%, he was covered by the entry in Section 5(1)(e), where he ought to have paid VAT @ 12% and that is how he is subjected to payment of interest by impugned order which is upheld by the Appellate Authority. The Petition is dismissed. Issues: Whether interest levied under Section 25(4) of the Goa Value Added Tax Act, 2005 for delayed payment of VAT on sales of ENA/RS/HBS for FY 2019-20 is valid and payable by the petitioner.Analysis: The statutory scheme requires registered dealers to file returns and make payment of tax within prescribed time limits; Revised Returns are permissible only within the period specified in Section 24. Section 25(4)(a) and Rule 24(4) render a dealer liable to interest where returns are filed without payment or with part payment, and provide for issuance of a demand notice for unpaid tax with interest at the prescribed rate. The petitioner filed returns (and later revised returns beyond the statutory period), claimed zero VAT while having collected VAT on certain sales, and made the differential payment only belatedly. The assessing and appellate authorities found the tax to be payable under the residuary entry in Section 5(1)(e) after omission from Schedule-C, and that the contingency in Section 25(4)(a) for levy of interest had arisen. The authorities also treated the demand notice as valid and recovery proceedings as permissible.Conclusion: The levy of interest under Section 25(4) is upheld and the petition challenging the interest demand is dismissed; decision is against the petitioner and in favour of the Revenue.