TaxTMI 
TaxTMI 
2013 (5) TMI 149
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....y specific direction those returns are required to be filed monthly. However, we need not concern ourselves with this inasmuch as the fact remains that the petitioner did not file any return in respect of the year 1980-81. The petitioner had also not deposited any tax during the currency of that year. 3. Section 23(5) of the said Act deals with the situation where a dealer fails to furnish returns in respect of any period by the prescribed date. In such eventuality, the Commissioner is mandated to, after giving the dealer a reasonable opportunity of being heard, make a best judgment assessment. Consequently, after due notice and opportunity to the dealer (petitioner herein) a best judgment assessment was made on 26.03.1985 by the assessing authority whereby the petitioner was directed to pay a sum of Rs. 52,39,763.23 under the said Act and by a separate order of the same date, the petitioner was required to pay a sum of Rs. 5,92,469/- under the Central Sales Tax Act, 1956. However, in neither case was any interest levied by the assessing authority under section 27(1) of the said Act. 4. Thereafter, on 01.10.1985, a show-cause notice was issued by the Assistant Commissioner seekin....
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....es Tax Officer (assessing authority) which created the additional demand of Rs. 52,39,769/- under the local Act and Rs. 5,92,466.68 under the central Act. 8. Thereafter, the revenue filed a review application before the Tribunal which was disposed of by the order dated 13.02.1994. It is this order, which is impugned before us. By virtue of the order dated 13.02.1994, the Tribunal reviewed its earlier order dated 31.07.1989, inter alia, on the point of interest. The Tribunal took the view that the issue of interest under section 27(1) of the said Act had not been considered by the Tribunal in the first round and as it ought to have considered the same, a review was in order. Thereafter, the Tribunal considered the matter on merits and decided that interest was chargeable from the petitioner under section 27(1) of the said Act. The Tribunal reviewed its order, dismissed the appeal filed by the petitioner in so far as the question of interest was concerned and directed the petitioner to pay the interest as determined by the Assistant Commissioner by virtue of his order dated 03.09.1986. 9. The writ petition has been filed by the petitioner being aggrieved by the said order passed by....
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....ould invite punishment with rigorous imprisonment that could extend to six months or with fine or with both. The learned counsel, in making the aforesaid submission, drew our attention to the following provisions of the said Act, which are reproduced hereunder to the extent relevant: - "Section 21 - Periodical payment of tax and filing or returns - (1) Tax payable under this Act shall be paid in the manner hereinafter provided at such intervals as may be prescribed. (2) Every registered dealer and every other dealer who may be required so to do by the Commissioner by notice served in the prescribed manner shall furnish such returns of turnover by such dates and to such authority as may be prescribed. (3) Every registered dealer required to furnish returns under sub-section (2) shall pay into Government Treasury or the Reserve Bank of India or in such other manner as may be prescribed, the full amount of tax due from him under this Act according to such return and shall where such payment is made into a Government Treasury or the Reserve Bank Of India furnish alongwith the return a receipt from such Treasury of Bank showing the payment of such amount. xxxxxxx xxxxxxxx xxxxxxxx ....
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....1965 SC 1454. He also referred to the decision of the Supreme Court in Associated Cement Company Ltd. v. CTO: (1981) 4 SCC 578. In particular, he referred to the minority view of Bhagwati, J. (as his Lordship then was). Thereafter, the learned counsel drew our attention to the Constitution Bench decision in the case of J. K. Synthetics Ltd. v. CTO: (1994) 4 SCC 276, wherein the majority view in Associated Cement Company Ltd. (supra) was overruled and the view taken by Bhagwati, J., that is, the minority view in Associated Cement Company Ltd. (supra) was upheld. Finally, the learned counsel referred to the Supreme Court decision in the case of Maruti Wire Industries Pvt. Ltd. v. STO & ORS.: (2001) 3 SCC 735. 13. In Ghasilal (supra) the Constitution Bench observed as under: - "10. In our opinion, there has been no breach of s. 16(1)(b) of the Act, and consequently, the orders imposing the penalties cannot be sustained. According to the terms of s. 16(1)(b), there must be a tax due and there must be a failure to pay the tax due within the time allowed. There was some discussion before us as to the meaning of the words 'time allowed' but we need not decide in this case whethe....
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....and the tax for the 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 non-compliance 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 th....
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....ge has observed that if the construction contended for on behalf of the assessee were accepted, registered dealers falling within Categories 3, 4, and 5 would be outside the provision enacted in sub-section (2) of Section 7 read with Section 11-B, clause (a) and no interest would be payable by them under that provision and that would make clause (a) of Section 11-B "either unworkable or meaningless". I must, with the greatest respect, confess my inability to appreciate the line of reasoning which has prevailed with the learned Judge in making this observation. The learned Judge has proceeded on the basis that the registered dealers falling within all the three Categories, namely, 3, 4 and 5 are required by sub-section (2) of Section 7 to pay the tax chargeable under Section 3 of the State Act and if they do not pay the same within the time allowed, that is, at the time when the returns are filed or in case the returns are not filed within the prescribed time, then before the expiration of the date when they ought to have been filed they would be liable to pay interest under Section 11-B, clause (a). There is, in my opinion, a basic fallacy underlying this assumption, because it is ....
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....n 7(2) of the Rajasthan Sales Tax Act, which are similar to the provisions of section 21(2) and 21(3) of the Delhi Sales Tax Act, 1975. 17. In J. K. Synthetics Ltd. (supra) the Supreme Court was considering as to whether the provisions with regard to levy of interest under section 11B of the Rajasthan Sales Tax Act (which is similar to section 27 of the Delhi Sales Tax Act, 1975) would have to be construed strictly or not. This question has been specifically raised in paragraph 9 in J.K. Synthetics Ltd. (supra) which reads as under: - "9. Before we proceed further we must emphasise that penalty provisions in a statute have to be strictly construed and that is why we have pointed out earlier that the considerations which may weigh with the authority as well as the court in construing penal provisions would be different from those which would weigh in construing a provision providing for payment of interest on unpaid amount of tax which ought to have been paid. Section 3, read with Section 5 of the Act, is the charging provision whereas the rest of the provisions provide the machinery for the levy and collection of the tax. In order to ensure prompt collection of the tax due certai....
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....cess Profits Tax, Bombay and Gursahai Saigal v. CIT, Punjab). But it must also be realised that provision by which the authority is empowered to levy and collect interest, even if construed as forming part of the machinery provisions, is substantive law for the simple reason that in the absence of contract or usage interest can be levied under law and it cannot be recovered by way of damages for wrongful detention of the amount. (See Bengal Nagpur Railway Co. Ltd. v. Ruttanji Ramji and Union of India v. A.L. Rallia Ram). Our attention was, however, drawn by Mr. Sen to two cases. Even in those cases, C.I.T. v. M. Chandra Sekhar and Central Provinces Manganese Ore Co. Ltd. v. C.I.T., all that the Court pointed out was that provision for charging interest was, it seems, introduced in order to compensate for the loss occasioned to the Revenue due to delay. But then interest was charged on the strength of a statutory provision, may be its objective was to compensate the Revenue for delay in payment of tax. But regardless of the reason which impelled the legislature to provide for charging interest, the Court must give that meaning to it as is conveyed by the language used and the purpos....
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....urnover and taxable turnover furnished or shown in the return. Therefore, so long as the assessee pays the tax which according to him is due on the basis of information supplied in the return filed by him, there would be no default on his part to meet his statutory obligation under Section 7 of the Act and, therefore, it would be difficult to hold that the 'tax payable' by him 'is not paid' to visit him with the liability to pay interest under Clause (a) of Section 11-B. It would be a different matter if the return is not approved by the authority but that is not the case here. It is difficult on the plain language of the section to hold that the law envisages the assessee to predicate the final assessment and expect him to pay the tax on that basis to avoid the liability to pay interest. That would be asking him to do the near impossible. xxxxx xxxxx xxxxx 19. In the result we are of the view that the majority opinion expressed by Venkataramiah, J. in the Associated Cement Company case does not, with respect, state the law correctly and in our view the legal position was correctly stated by Bhagwati, J. in his minority judgment. We, therefore, overrule the majori....
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.... as an amount twice the amount of sales tax payable but liability to pay penal interest cannot be cast on the assessee for such failure when the Act does not specifically provide for levy of penal interest for failure to file return of turnover. We find merit in the appellant‟s plea. A legislative casus omissus cannot be supplied by judicial interpretative process." 20. The Supreme Court ultimately concluded as under: - "7. The same issue which was dealt with by a three-Judges Bench of this court in the case of Associated Cement Co. Ltd. came up for the consideration of Constitution Bench in the case of J.K. Synthetics Ltd. (supra). This court overruled the majority opinion and approving the minority opinion in Associated Cement Co. case held that the provision by which the authority is empowered to levy and collect interest, even if construed as forming part of the machinery provisions, is a substantive law, not adjectival law, and interest cannot be recovered by way of damages for wrongful detention of the amount. This court further held that the "tax payable" or "tax due" is that amount which becomes due ex-hypothesi on the turnover and taxable turnover shown in or based....