TaxTMI 
TaxTMI 
1994 (5) TMI 233
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....the said Control Order did not form part of the sale price for the payment of sales tax. The appellant contends that it had raised the contention bona fide but the same was rejected by this Court by its judgment and order dated 22-8-1978 in the case of Hindustan Sugar Mills Ltd. v. State of Rajasthan & J.K. Synthetics Ltd. v. CTO, Kota'. By the said decision this Court held that the freight element formed part of the price of cement and sales tax was leviable on the sale price inclusive of the freight amount. The appellant was, therefore, required to pay sales tax on the sale price inclusive of the freight. There is now no dispute on the question of computation of the sale price for calculating the sales tax. The dispute now is limited to whether the appellant is required to pay interest on the additional sales tax which had to be paid on the inclusion of the freight amount in calculating the sale price. According to the appellant interest under Section 11 -B of the Act can only be charged for the period subsequent to the determination of sales tax under the final assessment and that too after the expiry of the period allowed under the Notice of Demand issued on finalisation of the....
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....ns. According to Section 10 the assessment and determination of tax due for any year, shall be made after the returns for all the periods of that year have become due. Section 11 -B makes provision for charging interest on failure to pay tax, fee or penalty. Clauses (a) and (b) of the said Section 11 -B before its substitution by Act 4 of 1979 w.e.f. 7-4-1979, read as under :- "11 -B. Interest on failure to pay tax, fee or penalty.- (a) If the amount of any tax payable under sub-sections (2) and (2-A) of Section 7 is not paid within the period allowed, or (b) If the amount specified in any notice of demand, whether for tax, fee, or penalty, is not paid within the period specified in such notice, or in the absence of such specification, within 30 days from the date of service of such notice, the dealer shall be liable to pay simple interest on such amount at one per cent per month from the day commencing after the end of the said period for a period of three months and at one and a half per cent per month thereafter during the time he continues to make default in the payments." (The two provisos are not material for our purpose.) 3. The Rajasthan Sales Tax Rules, 1955, h....
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....e on the contrary relies on the difference in language between sub-sections (2) and (2-A) of Section 7 and emphasising on the words "amount of tax due shown in the return" found in sub-section (2-A) of Section 7, which phraseology is not to be found in sub-section (2) of that section, contends that no interest can be charged under Section 11 -B. 5. Sub-sections (2) and (2-A) of Section 7 as they stood before their amendment by Rajasthan Act 4 of 1979, read as under : "(2) Every such return shall be accompanied by a Treasury receipt or receipt of any Bank authorised to receive money on behalf of the State Government, showing the deposit of the full amount of tax due on the basis of return in the Government Treasury or Bank concerned. (2-A) Notwithstanding anything contained in sub-section (2), the State Government may by notification in the Official Gazette require any dealer or class of dealers specified therein, to pay tax at intervals shorter than those prescribed under sub-section (1). In such cases, the proportionate tax on the basis of the last return shall be deposited at the intervals specified in the said notification in advance of the return. The difference, if any, ....
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....he information to be furnished in the return must be "correct and complete", that is, true and complete to the best of knowledge and belief; without the dealer being guilty of wilful omission. This is the essence of the verification clause found at the foot of Form ST 5. Rule 25 expects the verification of the return to be in the manner indicated in Form ST 5. Therefore, on a conjoint reading of Section 7(1), (2) and (2-A), Rule 25, the information to be furnished under Form ST 5 and the form of verification, it becomes clear that the dealer must deposit the full amount of tax due on the basis of information furnished, which information Must be correct and complete to the best of the dealer's knowledge and belief without he being guilty of wilful omission. If the dealer has furnished full particulars in respect of his business, without wilfully omitting or withholding any particular information which has a bearing on the assessment of tax, which he honestly believes to be "correct and complete", it would be difficult to hold that the dealer had not acted "bona fide" in depositing the tax due on that information before the Submission of the return. of course the tax so deposited is ....
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....elevant Assessment Years in question are from 1975-76 to 1977-78 we are concerned with Section 11-B as it stood before its substitution by Act 4 of 1979 w.e.f. 7-4- 1979. Section 11 -B then provided that if the amount of any tax payable under sub-sections (2) and (2-A) of Section 7 is not paid within the time allowed or if the tax amount specified in any notice of demand is not paid within the period specified, the dealer shall be liable to pay simple interest on such amount at one per cent per month for a period of three months and thereafter at one and a half per cent per month during the time he continues to make default in the payments. However, according to Section 11 -B substituted by Act 4 of 1979 w.e.f. 7-4-1979, the liability to pay interest accrues (a) where the dealer has furnished returns but has failed to pay the tax as per the said returns or within the time allowed; (b) where a dealer has furnished a revised return under Section 7(3) whereunder the amount of tax payable is larger than that already paid; (c) where a dealer has filed his return after expiry of the prescribed period but has not paid the tax as per return or within the time allowed; (d) where a dealer is....
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....e of demand and thereafter no interest would have to be paid till the expiry of the specified period or 30 days, as the case may be, and thereafter interest would have to be paid at a given rate for the first three months and thereafter at a higher rate. Such could not be the legislative intent. Secondly, take the case of a dealer who has failed to submit a return and is subjected to assessment of tax on the basis of best judgment. Pursuant to the said assessment he deposits the tax. Such a dealer would not be liable to pay interest on the balance tax if the tax assessed under Section 10 is higher than what was provisionally assessed. He can always claim that he cannot be made liable to pay interest for the error of the authority in making the provisional assessment under Section 7-A. The defaulter would be in a better position than a dealer who complies with the requirement of Section 7(1). And if he can show reasonable cause, he would also escape the penalty clause in Sections 7-AA and 16(1). More or less a similar situation may arise in the matter of payment of interest where provisional assessment is made under Section 7-B. Of course such a dealer may become liable to penalty b....
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....he 4th quarter was deposited after a lapse of two years. His appeal was dismissed by the Deputy Commissioner of Sales Tax who endorsed the view that the interim order of the High Court had not precluded the assessee from paying the tax and filing the returns. On the same line of reasoning penalty was also levied for the subsequent periods. Ghasilal challenged the levy of penalty by a writ petition and the High Court allowed the same. It may be noted that Section 7-AA was not on the statute book then and the penalty was levied under Section 16(1)(b) as it then stood which inter alia provided for imposition of penalty if the tax due was not paid within the time allowed. The submission made on behalf of Ghasilal was that there was no breach of Section 16(1)(b) inasmuch as no tax was due till the assessee filed his returns under Section 7(1) of the Act because the tax to be deposited as required by Section 7(2) was to be calculated on the basis of the return. There cannot be noncompliance of Section 7(2) unless a return is filed without depositing the tax due on the basis of the return. Hence, counsel contended, there was no violation of Section 7(2) and so long as the tax was not asse....
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....thin the time allowed. Should this provision be strictly construed or should it receive a broad and liberal construction, is a question which we will have to consider in determining the sweep of the said provision. We will do so at the appropriate stage but for the present we may notice the thrust of this Court's decision in the case of Associated Cement Co. Ltd.3 10. That was a case in which the Company had submitted its returns under the Act as well as the Central Act for the period between 1-8-1973 and 31-7-1974 accompanied by receipts evidencing the payment of tax on the basis of the said returns. The freight charges were, however, not included in the taxable turnover on the plea that the said charges were not liable to be so included. However, after the decision of this Court in Hindustan Sugar Mills Ltd.', revised returns including the freight charges were filed along with receipts evidencing the deposit of the balance tax amount under both the statutes. In the assessment order made under the Act the authority imposed penalty under Section 7-AA and levied interest under Section 11 -B of the Act for the delay in depositing the tax amount relatable to the freight charges. A ....
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....iled any return at all and who are later on found to be liable to be assessed, (ii) those who have filed a true return but have not deposited the full amount of tax which they are liable to pay and (iii) those who have filed a return making a wrong claim that either the whole or any part of the turnover is not taxable and who are subsequently found to have made a wrong claim, would be placed in the same position and they would all be liable to pay interest on the amount of tax which they are liable to pay but have not paid as required by sub-section (2) of Section 7 of the Act. We are of opinion that this view is in conformity with the legislative intention in enacting Section 11-B of the Act." 12. Referring to the Constitution Bench judgment in the case of Ghasilal2, the learned Judge observes that the said decision was distinguishable because it related to the sustainability of the penalties imposed under Section 16(1) of the Act and not interest levied under Section 11-B of the Act and secondly because Section 16(1)(b) was attracted when there was a failure to pay the 'tax due', an expression not employed by Section 11 -B of the Act. The learned Judge also points out that if ....
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.... filed." Pointing out that the construction pressed by the Revenue leads to a serious anomaly, the learned Judge proceeds to observe: (SCC p. 587, para 7) "If this construction were accepted, the tax payable under sub-section (2) of Section 7 would be the full amount of tax due on the basis of a correct and proper return and that would necessarily be the same as the tax assessed by the assessing authority, because what is a correct and proper return would be determinable only with reference to the assessment ultimately made. The assessment when made would show whether the return filed was correct and proper; it would be correct and proper if it accords with the assessment made; if it does not accord with the assessment, then to the extent to which it differs it would obviously have to be regarded as incorrect and improper. The consequence of the construction suggested on behalf of the Revenue would thus be that the tax payable under sub-section (2) of Section 7 would be the full amount of the tax as assessed, because that would represent the tax due on the basis of a correct and proper return and the assessee would have to deposit at the time of filing the return, an amount e....
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....ate of service of the notice. The learned Judge, therefore, concludes that the scheme of taxation under the Act clearly envisages that it is only when the assessment is made and the period specified in the notice of demand or 30 days, as the case may be, expires that the amount of tax as assessed becomes payable and if the same is not paid within the time allowed, the liability to pay interest thereon accrues. What becomes payable under Section 7(2) is only the tax due on the basis of the return actually filed, i.e., on the basis of self-assessment and thereafter the difference in tax on assessment, if the tax assessed is more than the tax deposited on self-assessment. Lastly, the learned Judge holds that the decision rendered in the case of Ghasilal2 applies on all fours and in the face of the ratio laid down in that case it is impossible to accept the viewpoint of the Revenue. With regard to the three instances mentioned by Venkataramiah, J. the learned Judge points out that in such cases penalty can be imposed under Section 16 of the Act. On this line of reasoning the learned Judge disagreed with the majority view. 16.It is well-known that when a statute levies a tax it does ....
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....s conveyed by the language used and the purpose to be achieved. Therefore, any provision made in a statute for charging or levying interest on delayed payment of tax must be construed as a substantive law and not adjectival law. So construed and applying the normal rule of interpretation of statutes, we find, as pointed out by us earlier and by Bhagwati, J. in the Associated Cement Co. case3, that if the Revenue's contention is accepted it leads to conflicts and creates certain anomalies which could never have been intended by the Legislature, 17. Let us look at the question from a slightly different angle. Section 7(1) enjoins on every dealer that he shall furnish prescribed returns for the prescribed period within the prescribed time to the assessing authority. By the proviso the time can be extended by not more than 15 days. The requirement of Section 7(1) is undoubtedly a statutory requirement. The prescribed return must be accompanied by a receipt evidencing the deposit of full amount of 'tax due' in the State Government on the basis of the return. That is the requirement of Section 7(2). Section 7(2-A), no doubt, permits payment of tax at shorter intervals but the ultimate....