TaxTMI 
TaxTMI 
1988 (8) TMI 388
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.... on and from 27th June, 1956 and as amended from time to time. 3.. The Assam Finance (Sales Tax) Act, 1956 (for short, "the Act") was amended from time to time and one of such amendments was made in 1977 which came into force with effect from 15th December, 1977. This would be relevant for our consideration with respect to few of the cases we are to deal with. Similarly, the Assam Finance (Sales Tax) Rules, as amended in 1968 was published in the Assam Gazette (Part II-A) dated 25th June, 1969. This amendment was given effect retrospectively from 1st January, 1968. This would also be relevant for the purpose of these cases. It is needless to say that a legislation or a statute is enacted to achieve some public purpose and the policy of law and the object sought to be achieved can furnish reliable guidelines for required exercise of discretionary power. It is also very clear that if a statute declares a definite policy, it must have a definite standard for the rule against the delegation of legislative power and also for equality if the standard is reasonable. The Act thus proposes to impose a liability on traders to pay tax on sales of taxable commodities as prescribed in the....
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....ing authority issued demand notice on them to pay the amount of tax but not interest; (3) dealers who had filed their returns and paid tax due according to the returns after expiry of prescribed time and in whose cases the assessing authority had accepted the returns and had issued demand notice on them to pay tax and thereafter assessed interest after 2 years on the amount of tax for the period for which such payment was delayed. 7.. One of the moot points as advanced in all these cases relates to levy of interest after completion of assessment and issue of demand notices for payment of such interest. The second significant question which arises in these cases is as to whether after completion of final assessment, the authority could levy interest and issue demand notices for payment of interest without taking recourse to rectification proceedings as provided under section 12 of the Act. In the context of the above the next question would come for consideration as to whether the interest could at all be levied when the final assessment was made for payment of required tax. Admittedly, in several cases no rectification proceeding was resorted to for enhancing the earlier asse....
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....o do and has allowed him a reasonable opportunity of being heard. (2) Where any such rectification has the effect of reducing the assessment, a refund shall be due to the dealer. (3) Where any such rectification has the effect of enhancing the assessment, a notice of demand shall be issued for the sum payable." One of the main thrust of argument centres round the application of aforesaid provision of section 12(1), relating to the levy of interest without taking recourse to the rectification proceedings of the earlier assessment order. 9.. Now, let us have a cursory glance at the provisions of rules 32A and 32B which have also been challenged as ultra vires and beyond the legislative competence of the State Legislature. Rules 32A and 32B are both amended provisions of the former Rules which were published in the Assam Gazette (Part II-A) dated 25th June, 1969 and brought into force with effect from 1st January, 1968. The provisions of rule 32A prescribe the rate of simple interest that could be levied for failure to submit the return and payment of required tax due by a dealer within the period prescribed under rule 17 of the Rules and of the proviso thereunder. Rule 32A o....
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....Interest payable by dealer.-(1) If any registered dealer does not pay into a Government treasury the full amount of tax due from him under this Act on the basis of the return or his account books within the prescribed date, simple interest at the rate of six per cent per annum from the first day of the month next following the said date shall be payable by the dealer upon the amount by which the tax so paid falls short of the amount of tax payable as per his return or account books. If such amount of tax and interest are not paid within thirty days from the date from which the interest is due, simple interest up to a maximum of 24 per cent per annum shall be payable as may be prescribed. (2) Where on making the assessment, the Commissioner finds that a dealer has not maintained the account books properly and thereby he has suppressed the sale of goods in any period, the Commissioner may direct him to pay interest as prescribed in sub-section (1). If the amount of tax payable under the Act has been reduced in appeal or revision, the interest may be calculated on the reduced amount. (3) If any registered dealer does not pay into the Government treasury the amount of tax within ....
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....les the learned counsel for the petitioners have urged before us the following points: That the provision of section 22A of the Act is violative of section 15 of the Central Sales Tax Act, 1956 read with article 286 of the Constitution of India and it is beyond the legislative competence of the State Legislature to enact the provisions being not covered by item 54 of List II of the Seventh Schedule to the Constitution to levy such interest to the maximum of 24 per cent per annum in case the amount of tax and interest are not paid within 30 days from the date from which the interest is due. In the aforesaid context it is further submitted by the learned counsel for the petitioners that it suffers from vice of excessive delegation inasmuch as essential legislative function in the matter of fixation of rate of interest has been delegated to the executive without any control or guidelines in this matter. The next ground of attack is as to the validity of rules 32A and 32B of the Assam Finance (Sales Tax) Rules, 1956 as amended. It is submitted by the learned counsel that these two rules as incorporated, namely, 32A and 32B of the amended Rules read with section 22A of the Act are....
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....esenting the State of Assam, the respondent in these cases. The following submissions were made by Mr. Lahiri, learned counsel for the respondent: (a) That in the present nature of the cases the question of applicability of section 12 of the Act does not arise. According to the learned counsel no rectification proceeding is required to be taken up for levy of interest and the assessing authority is competent to issue the order and demand notice for payment of interest to the dealers who have defaulted to pay due tax for the period for which it becomes due. It is obligatory, as submitted by Mr. Lahiri, on every dealer to submit correct return and also to pay due tax and in failure of which, irrespective of the assessment made for the amount of tax due, the assessing authority can levy interest in a separate proceeding which does not require any rectification of the earlier order of assessment. Therefore, according to the learned counsel, if a rectification proceeding is not taken up, which in fact was not needed in the present nature of the cases, there was no obligation on the part of the authority to issue any prior notice to the dealer to afford an opportunity of being ....
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....e rival contentions of the parties let us consider the principle behind the taxation statute and the Rules under the statute. If the statute provides that taxation may be made only by rules framed under the Act, no imposition can be made except in accordance with such rules and not by any executive order. A statute may authorise the executive to vary the list of taxable commodities by addition or deletion, and even to fix rates of taxation. It is clear that the doctrine imposes on the rule-making authority the duty of framing the rules only in conformity to the provisions of the Act under which the rules are framed. If the rules are not warranted by the statute, the rules must be declared ultra vires. Article 265 of the Constitution lays down that no tax shall be levied or collected except by authority of law, and law has been interpreted to mean rules, bye-laws or regulations provided the statute under which these rules, etc., are made, authorises the imposition. Though rules can be declared ultra vires the power of the authority to make such rules, what would be the position if the rules are declared to be part of the statute by using the formula "as if enacted in the Act" wit....
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....e petitioners. However, the High Court dismissed the petitions because in its opinion there was no substantial but a "procedural" defect and failure to issue notice would not have any effect because the result would have been the same even if notice had been issued. Their Lordships of the Supreme Court, however, held that the High Court was wrong in holding that there was no breach of principle of natural justice and further held that the High Court ought to have quashed the order. It was observed and held: "It will appear from this that the action under section 35 may be taken in favour of the tax-payer without any notice to him but if the action has the effect of enhancing an assessment or reducing the refund, the Income-tax Officer, acting under section 35, must send a notice to the assessee and give him a reasonable opportunity of being heard." This admittedly was not done in these cases. It was incumbent upon the Income-tax Officer to give notice and a hearing to an assessee when the effect of rectification would be the enhancement of the assessment. This view of the Supreme Court was expressed in the context of the similar view as expressed in the case of Sinha Govin....
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....d but on the default being committed the dealer becomes liable to pay interest under sub-section (2) on the amount of such tax from the last date of filing quarterly returns prescribed under the Act. In the present case it is the admitted position that tax due on the basis of quarterly return was not paid as required by sub-section (3) and the petitioner was, therefore, liable to pay interest on the amount of tax in respect of which default was committed at the rate prescribed in sub-section (2) from the last date prescribed for filing quarterly return under the Act up to the date of payment........" 20.. In Kishan Lal Agarwalla v. Agricultural Income-tax Officer, Assam 1974 ALR 292 this Court had the occasion to deal with the provision of section 19 of the Assam Agricultural Income-tax Act, 1939 which subsequently was amended in 1967. In the said case the proceeding for assessment was initiated by issue of notice under section 19(2) of unamended Act. In that case it was held that when the proceeding was started under unamended provision of section 19 of the Act, the assessment proceeding must be finalised keeping in view the unamended Act. It was further held that in view of se....
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....nsonance with the provisions of the Act. But making the provisions of the rule for giving any retrospective operation in demanding such tax prior to 25th June, 1969 (when the Rules were published in the Assam Gazette) cannot be given effect to for the reason that the fixation of rate of interest cannot have any retrospective effect. Reference can be made to a decision of this Court rendered in Hanuman Match Works [1982] 50 STC 295; (1982) 1 GLR 181. All such questions were raised in the said case. It was a case under the Assam Finance (Sales Tax) Act and the Rules. In that case rule 46A which was inserted by an amendment in 1971 was given retrospective effect on and from 1st January, 1968. It was held in that case that the statute does not authorise a rule-making authority to give a rule retrospective effect. 22.. Here in this case the provisions of rules 32A and 32B of the Rules were published on 25th June, 1969 by giving a retrospective effect from 1st January, 1968. For this, though the Rules would not become invalid, but the retrospective operation would alone be ineffective. Therefore, the new Rules must be deemed to have started operating on and from 25th June, 1969 and no....
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....f the tax for the period during which it has remained unpaid. The very period for which interest is levied under the relevant provision points to the nature of the levy. If that is borne in mind, it will be apparent that the levy of interest is part of the process of assessment. Although section 143 and section 144 do not specifically provide for the levy of interest and the levy is, in fact, attributable to sub-section (8) of section 139 or section 215, it is nevertheless a part of the process of assessing the tax liability of the assessee........" 25.. In the present cases at hand, there is no dispute that in case of default as prescribed under the aforesaid relevant provisions of law for submission of return or for non-payment of full tax due, the interest begins to accrue on unpaid amount of tax. But while the assessment was completed in the year 1973 even for the period ending for a particular quarter, it was known to the assessing authority that the dealer was liable to pay interest for such default of payment of due tax. But the assessing authority failed to assess interest along with due assessment of tax though in the assessment form a separate column for a....