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2008 (12) TMI 679

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....e and another Vs. State of Orissa). He submitted that 136 STC 606 (cited supra) might require reconsideration. 3. The learned Special Government Pleader very fairly placed all the decisions for and against the department and argued the matter. 4. We will first deal with the pure question of law and then the two cases on their individual merits. 5. The AST act came into force in 1970. The validity of this Act was upheld in (1974) 34 STC 73(S. Kodar Vs. State of Kerala). The Act is a short one. We will extract the same. "The Tamil Nadu Additional Sales Tax Act, 1970 (ACT No.XIV of 1970) (Received the assent of the Governor on 22nd May 1970) An Act to provide for the levy of Additional Sales Tax WHEREAS it is considered necessary to levy an additional tax on the sale or purchase of goods; BE it enacted by the Legislature of the State of Tamil Nadu in the Twenty-first year of the Republic of India as follows: Section 1. Short title and commencement.-- This Act may be called the Tamil Nadu Additional Sales Tax Act, 1970. Section 1(2). It shall be deemed to have come into force on the 1st April, 1970. Levy of additional tax in the case of certain dealers.-- .. Section 2 (1) ....

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....arm or company situated outside the state at the rate of 2.5 percent in respect of dealers whose taxable turnover exceeds Rs.100 crores but does not exceeds Rs.300 crores and at 3 percent in respect of dealers whose taxable turnover exceeds Rs.300 crores and to amend the said Act for the purpose. 2. Every dealer, who is liable to pay additional Sales Tax under the said Act has to furnish returns and statements in the prescribed form. But there is no specific provision in the said Act, to levy penalty for non submission of return or statement or furnishing incorrect or incomplete return or statement by the dealer. The Sales Tax Appellate Tribunal has also held that, in the absence of specific provisions in the said Act, penalty could not be levied for belated submission of returns or statements. The Government have, therefore, decided to amend the said Act for this purpose also. 3. The Bill seeks to give effect to the above decision." 7. In Kartik Mills's case this Court held as follows: "7. The Tamil Nadu Additional Sales Tax Act by Section 2(1)(b), makes the provisions of the Tamil Nadu General Sales Tax Act applicable in relation to the additional tax payable, as they apply i....

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....in the submission made by the learned counsel for the petitioner. The levy of penalty on surcharge cannot be sustained." 9. The Learned Special Government Pleader submitted that the issue will have to be looked at in the context of the State Act and not the CST Act. He submitted that J.K.Synthetics and India Carbon dealt with CST Act, which did not have any provision for levying interest, and those decisions were given in that context. They will not apply to the present case where the original Act namely the Tamil Nadu General Sales Tax Act ('TNGST Act' in short) contains the penalty provision and in view of     S.2(1)(b), the penalty sections in TNGST Act must be read into the AST Act. He also submitted that the Amendment Act 1976 cannot be construed as a provision that introduces the levy of penalty for the first time, but as a clarificatory piece of legislation which reiterates what has been the correct position all along. He referred to the following decisions: (i) (1980) 46 STC page 451 (S. Rajamani Vs. The State of Tamil Nadu) (ii) (1983) 52 STC 131 (The State of Tamil Nadu Vs. P.M.A. Mathurai Veerasamy & Co.) (iii) (1983) 53 STC page 1 (Ashok....

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.... it is not necessary to dwell on this case any further. b) 39 STC 12 (cited supra) In this, the assessee claimed refund of tax in accordance with S.15 (b) of the CST Act. The Supreme Court held that even if there was some ambiguity in the Clause (b) of S.15 as it originally read, it had been clarified by the Amendment Act 1976. In this context, the Supreme Court said, "The amendment made in clause (b) can thus be taken to be an exposition by the legislature itself of its intent contained in the earlier provision. ... As already mentioned above, the legislature as a result of the amendment, clarified what was implicit in the provisions as they existed earlier. An amendment which is by way of clarification of an earlier ambiguous provision can be useful aid in construing the earlier provision, even though such amendment is not given retrospective effect." This was relied on by the Special Government Pleader to buttress his case that the Amendment act 1996 was only to make clear what was implicit even originally, i.e. the right to levy penalty. c) 46 STC 451(cited supra) This related to collection of surcharge under the TNST Surcharge Act. The Division Bench held, "The learned ....

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....the Sales Tax Act for illegal or unauthorised collection of surcharge." Therefore, our Court has construed an identically worded section as giving no scope for levying penalty. e) 53 STC 1(cited supra) This is the trump card in the hand of the learned Special Government Pleader, according to whom it answers all the questions. In this case, the question was whether the levy of additional tax under the Orissa AST Act was a single point levy or multipoint levy.This Act is identical to the Tamilnadu AST Act. Levy of single point tax and prohibition of tax at more than one point is the important feature of the Principal Act. The Supreme Court held as follows: "The assumption made by the High Court that the Act was an independent Act having nothing to do with the principal Act is not correct. The Act only levied some extra sales tax in addition to what had been levied by the principal Act. The nature of the taxes levied under the Act and under the principal Act was the same and the legislature expressly made the provisions of the principal Act mutatis mutandis applicable to the levy under the Act. The additional sales tax was in the nature of a surcharge over and above what was due a....

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....1 cannot be taken as laying down the law correctly." g) 69 STC 195 (cited supra) "... yet in view of the specific provisions of section 3(2) of the Surcharge Act and section 22(2) of the Sales Tax Act and inasmuch as Deputy Commissioner (C.T.) v. M. Murugesan and Bros. [1985] 58 STC 143(Mad.) has considered the decision of the Supreme Court in Ashok Service Centre v. State of Orissa [1983] 53 STC 1, we are of the view that the suo motu restoration of the penalty imposed by the assessing authority, by the Board, is correct and in accordance with law. ... We hold that the provision in section 3(2) of the Surcharge Act would apply to all the provisions of the Sales Tax Act. h) We have already extracted from Kartik Mills case i) 90 STC 84(cited supra) In this case, our High Court held thus: "The words "sales tax law of the appropriate State" in sections 2(i), 8(2)(b) and 8(2-A) of the Central Sales Tax Act, 1956, will encompass any law providing for the levy of sales tax, and not merely the general sales tax law only. The additional tax, surcharge and additional surcharge levied under the Tamil Nadu Additional Sales Tax Act, 1970 and the Tamil Nadu Sales Tax (Surcharge) Act, 1971....

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....R 164 at 185 to 190). Our attention was, however, drawn by Mr Sen to two cases. Even in those cases, CIT v. M. Chandra Sekhar [1985] 151 ITR 433 and Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961 (SC), 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 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. case [1981] 48 STC 466 (SC) that if the Revenues contention is accepted it leads to conflicts and creates certain anomalies w....

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.... later Act manifests an intention to modify the main Act; the charging provisions are substantive provisions; there can be no levy of penalty without a charging section. The rule against restrospectivity is not applicable to clarificatory legislation. 13. Bearing this in mind, we will go back to the S.3-B. Section 3-B. Levy and collection of penalty-All the provisions relating to offences and penalties of the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959), hereafter in this section referred to as the said Act, shall, with necessary modifications, apply in relation to the assessment, re-assessment, collection and the enforcement of payment of any additional tax required to be collected under this Act, or in relation to any process connected with such assessment, re-assessment, collection or enforcement of payment as if the additional tax under this Act, were a tax under the said Act." S3-B says that all the provisions relating to offences and penalties in TNGST Act shall apply in relation to the assessment, re-assessment, collection and the enforcement of payment of any additional tax under the AST Act, as if additional sales tax is a tax under the TNGST Act. I....

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....clarificatory sections are of no help since the S.3-B is not a clarificatory section, it introduces for the first time the power to levy penalty. Karthik Roller Mills case correctly hold that in the absence of the substantive provision, in the AST Act itself, relating to levy of interest, the provisions of the TNGST Act cannot be the source of power of such levy. Similarly, unless there is a charging section for levy of penalty, there can be no automatic reading of the power to levy penalty. The levy of penalty cannot be sustained. We are in agreement with 136 STC 606(cited supra). In our view, therefore, we see no reason to refer the matter for reconsideration. 15. Now we come to the merits of each case. (1) T.C.No.1499 of 2006 deals with the assessment year 94-95. The only question raised with regard to payment of penalty. The assessee has paid the AST. Therefore, this has to be allowed and the question is answered in favour of the assessee. (2) T.C.No.839 of 2006, the following questions of law are raised: "(i) Whether in the facts and circumstances of the case the Sales Tax Appellate Tribunal is right in relying on the resale price of the goods sold by the Petitioner. (ii)....