TaxTMI 
TaxTMI 
1998 (12) TMI 526
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....dustan Aluminium Corporation, against one and same order dated September 24, 1990 governing all cases on the point involved and given in 11 appeals filed by the assessee. Revision Nos. 1 to 11 of 1991 referred to above have been preferred by the Commissioner, Sales Tax, U.P., as well from the order of Tribunal dated September 24, 1990. These revisions primarily raise the question of interpretation of section 8 of the U.P. Sales Tax Act, 1948 and in particular the explanation attached to sub-section (1). The question involved in these revisions is the question of liability to pay interest under section 8(1) of the U.P. Sales Tax Act, 1948 (hereinafter to be referred as "the Act") for the period beginning from the date of filing of the return to the date of determination of the question of rate of sales tax by the Supreme Court which had been involved in these cases. As the only question involved in all these revisions relates to the liability being fastened on the assessee for payment of interest and its extent being common to all these revisions these revisions are being decided by one and common judgment. 2.. The revisionist, Hindustan Aluminium Corporation (hereinafter referred ....
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.... stand apart from personal hearing which took place on October 7, 1974, by letter dated October 10, 1974. Notices were issued in respect of various quarters of the assessment years 1973-74 and 197475 to the applicant by the Sales Tax Officer, Mirzapur. On November 26, 1974 the Sales Tax Officer, Mirzapur issued two show cause notices to Hindalco and informed that aluminium ingots properzi rods, extrusion rolled products are unclassified items and, therefore, the provisional assessment order had not been passed for the quarter ending on June 30, 1974 and September 30, 1975. The applicant's case is that Hindalco preferred writ petition against the aforesaid show cause notice. The aforesaid writ petition was admitted by this Court (High Court) and interim order staying the further proceedings relating to provisional assessment was passed in favour of the dealer, i.e., Hindalco, but later on July 10, 1975 the said writ petition was dismissed as being premature on the ground that no assessment order had been passed against the appellant and the appellant will have ample opportunity to represent this point before the Sales Tax Officer and thereafter the appellant will be at liberty to ap....
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....ts and circle used in the manufacture of brasswares and scraps containing only any of the metals copper, tin, zinc or nickel except those included in any other notifications issued under the Act." It may also be mentioned here that according to Hindalco the Commissioner, Sales Tax, issued a circular to all the Sales Tax Officers and Assistant Sales Tax Officers intimating that it would be proper to tax aluminium ingots in the category of metals and in respect of all other items such as rods, billets, bars and rod products, etc., the tax at the rate of 7 per cent would be payable as unclassified items. On October 30, 1975 the Sales Tax Officer, Mirzapur, intimated the dealer Hindalco that only aluminium ingots were treated in the category of metal while on other items single point tax at the rate of 7 per cent would be payable. The applicant's case is that Hindalco disputed the department's contention which was contained in the letter of intimation dated October 30, 1975 vide Hindalco's letter dated September 7, 1975. On November 12, 1975 as mentioned earlier the show cause notice has been issued to Hindalco to show cause why the provisional assessment order on the above mentioned ....
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....e applicant- dealer meanwhile under the orders of the High Court aforesaid, the assessing authority, i.e., Sales Tax Officer, Mirzapur decided the matter and held that properzi redraw rods were cast products and were covered by expression metals and alloys. It is an admitted fact that the appeal before the Supreme Court was finally dismissed vide judgment dated July 28, 1981 reported in [1981] 48 STC 411; 1981 UPTC 1249 (Hindustan Aluminium Corporation Ltd. v. State of Uttar Pradesh). According to the applicant the hearing of the appeal has taken place before the Supreme Court in September, 1979 and the appeal has finally had been disposed of and dismissed in July, 1981- sometime after expiry of 22 months or 23 months. According to the applicants the dispute between the parties was about the rate of tax at all the stages, i.e., before the assessing authority as well as in the matter before the High Court in the writ petition and in appeal before the Supreme Court. The admitted position between the parties is that after the judgment of the Supreme Court the dealer-revisionist deposited a total sum of Rs. 2,59,79,679.54 as difference of tax during the period and dates between July 29....
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....he case of former, i.e., the assessee who does not collect the tax from the customers, the question of bona fides would be material, in the latter case, i.e., one who collects the tax and retains the same for its own purposes the question of consideration of equity does not arise. The Tribunal took the view that the appellants, no doubt, been litigating the dispute regarding the rate of tax bona fide but it was necessary to go into that matter in view of the above distinction and on this reason the Tribunal held that interest had rightly been levied in the case of the present dealers from the date of filing of the return when the payment of tax had become due irrespective of the fact that the dispute regarding rate was settled later on. 4.. Feeling aggrieved from this order dated September 24, 1990. Hindalco preferred Revision Nos. 107 to 117 of 1990 as mentioned above while the Commissioner, Sales Tax, U.P., preferred Revision Nos. 1 to 11 of 1991. I have heard Sri Bharatji Agarwal, Senior Advocate, assisted by Sri S.M.K. Chaudhary, advocate, for Hindalco and Sri R.S. Tripathi, learned Standing Counsel. Shri Bharatji Agarwal, learned counsel for the revisionist-applicant submitte....
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.... (1) of section 8 of the Act requires is that the dealer shall deposit within the time prescribed the tax admittedly payable by him, failing which simple interest at the rate of 2 per cent per mensem shall become due and payable on the unpaid amount since the last date prescribed. Learned counsel submitted that the admitted tax or the liability of tax which was admitted, had been deposited. Learned counsel submitted that sales tax is a taxation statute. If two interpretations of provision are possible that it has to be interpreted in a manner which is beneficial to the subject. He submitted that expression "tax admittedly payable" means that the amount of tax at the rate admitted by the assessee to be payable by him is required to be deposited within the prescribed time. He submitted that the use of expression "admittedly" means the amount of tax on the turnover of sale or purchases of the dealer and it includes the amount payable under section 3B of the Act as well. He submitted when we talk of "admitted" then it further indicates and it also covers the rates at which the dealer admits the tax to be payable by him. Shri Bharatji Agarwal submitted that when the rate of tax has bee....
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.... be strictly observed as the statute is designed to prevent the tax evasion so the provisions of the Act have to be given full effect. He submitted interest is charged for illegal retention of Government money and if one illegally retains on one pretext or the other he is bound to compensate the Government in all equity. He further submitted that there may be bona fide dispute as to the rate of tax but when the Sales Tax Officer informed the dealer that the rate has been changed to 7 per cent the assessee had to deposit at that rate though beyond doubt he has a right to dispute the tax and the rate of tax. I have applied my mind to the respective contentions of the parties and I have gone through the record of the case. The main dispute between the parties has been that on the turnover of the revisionist respecting various products, at what rate the tax has to be deposited as under the Sales Tax Act as various items are chargeable under different rates of tax for illustration as in the present case. According to the revisionist aluminium ingots, redraw rods, rolled extrusion and the like all were liable to tax and the sales tax was chargeable on the sale thereof, according to the d....
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.... purposes of this sub-section, the tax admittedly payable means the tax which is payable under this Act on the turnover of sales or, as the case may be, the turnover or purchases, or of both, as disclosed in the accounts maintained by the dealer or admitted by him in any return or proceeding under this Act, whichever is greater, or if no accounts were maintained, then according to the estimate of the dealer." What sub-section (1) provides is this that the tax which is admittedly payable by a dealer on the turnover of his sale or turnover of purchase shall be deposited by him within the time prescribed. The expression "prescribed" has been defined in the Act to mean prescribed by rules framed under the Act. According to the rules in the present case there is no dispute that the revisionist dealer had deposited the tax within the time as prescribed by the rules. The dispute centres round the meaning of the phrase "tax admittedly payable". The Explanation to section 8(1) provides that tax admittedly payable means the tax which is payable on the turnover of sale or turnover of purchase or on both, as the case may be, or admitted by him in the return or proceeding under the Act whichev....
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.... payable by a dealer under this section shall be computed as follows: (a) on the turnover relatable to the period prior to such alteration as though the amount specified in or notified under sub- section(2) had not been altered; and (b) on the remainder, as though the altered amount had been in force on all material dates. (5) Where tax is payable, and has been so paid, by a commission agent on any turnover on behalf of his principal, the principal shall not be liable to pay the tax in respect of the same turnover." According to sub-section (1) every dealer is required for each assessment year to pay a tax at the rates provided by or under section 3-A or section 3-D on his turnover of sale or purchase which has to be determined in the manner prescribed, i.e., liability to pay tax is imposed for each assessment year on the turnover of sale or purchases or both and at the rate provided under section 3-A or 3D. Sub-section (2) of section 3 of the Act provides any exception or cases where a dealer may not be liable to tax. Section 3-A deals with the rate of tax that may be determined or provided by notification. Section 3-D of the Act also provides for the determination of sales t....
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....sh notice is required to be served but where the amount of tax assessed by the assessing authority is not enhanced as a result of proceedings of appeal or revision sub-section (9) provides that no fresh notice need be issued. A perusal of sub-section (8) of section 8 as well as sub-section (9) of section 8 of the Act per se shows that where tax is assessed under the Act a notice is to be served, i.e., notice of assessment and demand and the dealer is to deposit the tax so assessed within 30 days of the service of notice. Again, when there is enhancement of tax either in appeal or revision then the assessing authority is required to serve a fresh notice in respect of the amount by which tax is enhanced in appeal. The person is required to deposit the tax determined or assessed and determination may involve the determination of dispute between the assessee and the department which may relate to the quantum of turnover, it may relate to the rate of tax with reference to applicability of the entry and the tax relevant thereto and naturally it may relate to the quantum of amount of tax. The use of the expression "tax" here connotes the meaning of tax quantified, i.e., amount of tax whi....
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....tment claims on the turnover submitted by the dealer. This will run counter to the letter and the spirit of section 3 as well as section 8(1) of the Act. This section really is based on qualitative doctrine, i.e., the tax or the amount of tax which a person admits to be payable by him on his turnover and at the rate at which he admits that should be deposited for the benefit of the State to enable the State to run. When a person is required to deposit under section 8 of the Act the intention is that whatever is the admitted liability in the matter of tax must be discharged by the dealer or assessee so as to enable the State to run properly on the one hand and on the other hand to provide an opportunity to the assessee or the dealer to wait to get the dispute decided and to be relieved from depositing the disputed amount of tax to be determined and assessed on the basis of determination of disputed questions involved in the process of assessment of tax, i.e., quantum of turnover may be in dispute which has to be determined. The rate and entries indicating the rate and which entry will apply if there is dispute that has got to be determined and on the determination of those points f....
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....ould not be taken or the difference to be the tax admittedly payable by the dealer. It might be tax finally determined and assessed by the apex Court with reference to the dispute of entry applicable. That being the position failure to deposit the difference amount will not make the dealer liable to pay interest at the rate of 2 per cent per mensem. I am, therefore, of the opinion that the opposite parties have committed jurisdictional error in imposing the interest and in holding the dealer-revisionist to be liable to pay the interest on the basis of mis-interpretation of the provisions of the Act and in imposing the same. 6.. As regards the connected revisions, i.e., Sales Tax Revision Nos. 1 to 11 of 1991 it had been contended that the Tribunal had erred in not holding that the 11 appeals filed by the dealer had not been maintainable. Learned Standing Counsel submitted that the order passed by the assessing authority, i.e., Sales Tax Officer levying the interest under section 8 of the Act was not appealable nor was the order directing the said interest to be deposited liable to be appealed. Learned Standing Counsel had also submitted that the Tribunal has erred in holding that ....
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....ht have realised the tax but that is not relevant at this juncture because the section does not provide any such thing as bona fide dispute. This had been the view taken by the Supreme Court as well in the case of Commissioner of Sales Tax v. Qureshi Crucible Centre [1993] 89 STC 467 (SC); AIR 1994 SC 25 after having referred to the observation of the learned single Judge of our High Court in the revision which reads as under: "There have been no finding by the Tribunal that the assessee acted mala fide in not depositing the tax at the rate of 7 per cent. The demand of interest was not justified." Their Lordships observed: "We are unable to see any relevance of the mala fides in this case. Section 8(1) does not say that the non-payment should be mala fide. This is also not a case where the rate of tax applicable was in dispute or disputed by the dealer. This is simply a case where the dealer calculated the tax at an inapplicable rate. He did not and could not plead ignorance of the change in rate of tax effected two years earlier. In the circumstances, the concept of such mala fides was not relevant in the context." In paragraph 4 of that very judgment their Lordships of the Su....
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....er person aggrieved by an order made by the assessing authority, other than an order mentioned in section 10-A, may, within thirty days from the date of service of the copy of the order, appeal to such authority as may be prescribed." Section 9 of the Act per se shows that any order made by assessing authority except the orders referred to in section 10-A of the Act are appealable. Section 10-A of the Act provides the order against which no appeal nor any revision does lie. It means except orders referred to in section 10-A of the Act all orders passed by the assessing authority have been made appealable. Section 10(2) of the Act provides for an appeal to the Tribunal from the order passed by the appellate authority under section 9 of the Act. In the present case the assessing authority had passed a composite order making the assessment of tax and thereafter ordering the dealer to deposit the unpaid disputed amount of tax as well as directing the dealer to deposit a sum of Rs. 2,32,728 as interest. The order being composite which had been passed under rule 41(7) of the Rules directing the assessee to deposit the balance of tax assessed which had remained unpaid as well as directin....
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.... the purposes of this sub-section, the tax admittedly payable means the tax which is payable under this Act on the turnover of sales or, as the case may be, the turnover or purchases, or of both, as disclosed in the accounts maintained by the dealer or admitted by him in any return or proceeding under this Act, whichever is greater, or, if no accounts were maintained then according to the estimate of the dealer and includes the amount payable under section 3-B or sub-section (6) or section 4-B. (1-A) The tax assessed under this Act shall be deposited in the manner specified in and within thirty days of the service of the notice of assessment and demand. (1-B) If the tax [other than the tax admittedly payable to which sub-section (1) applies], assessed, reassessed or enhanced by any authority or court remains unpaid for three months after expiration of the period specified in the notice of assessment and demand simple interest at the rate of one and half per cent per mensem on the unpaid amount calculated from the date of such expiration shall become due and be payable: Provided that the amount of interest under this sub-section shall be recalculated if the amount of tax i....