1999 (7) TMI 644

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....stantive provision in this behalf. This judgment was followed in V.V.S. Sugars v. Government of Andhra Pradesh [1999] 114 STC 47 (SC) and Commissioner, Trade Tax, U.P., Lucknow v. Ashoka Rice Mills [1999] 112 STC 566 (All.). 2.. There is no dispute that the liability of interest is a substantive law and unless the statute under which the interest is levied specifically so authorises no interest can be levied. Section 13(2) of the Karnataka Sales Tax Act, 1957 uses the word levy of penalty for delayed payment of tax. This Court in Sha Ghelabhai Devji and Company v. Assistant Commissioner of Commercial Taxes (Assessment) [1986] 62 STC 418; (1985) Kar LJ 83 interpreted section 13 as under:   "17. Section 13 of the Act employs the te....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... 1981 SC 463 and K.P. Varghese v. Incometax Officer, Ernakulam [1981] 131 ITR 597 (SC) and a Full Bench of this Court in C. Arunachalam v. Commissioner of Income-tax [1985] 151 ITR 172 (Kar) [FB]; ILR (1984) 2 Kar 1387, we are of the view that what is provided in section 13(2) of the Act is only interest and not penalty." A circular was issued by the Commissioner on May 23, 1998 in which it was instructed that all cases of delayed payment of deemed or assessed tax or any amount due under the Central Sales Tax Act, 1956 would attract penalty. "The honourable Supreme Court has in para 12 of their judgment, specifically said that section 9(2-A) makes no reference to interest. Whereas the Assam Sales Tax Act refers to levy and collection ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....667 levied under the Central Sales Tax Act was also claimed as business expenditure under section 37 of the Income-tax Act, 1961. It was observed that the penalty was imposed not on account of any delayed payment of Central sales tax but was for contravention of the provisions of the Central Sales Tax Act. There is nothing on record to show that the amount of compensation had a compensatory element in it. No relief was given. In respect of damages it was considered that it was partly compensatory in nature and partly penal. Similarly in Malwa Vanaspati and Chemical Co. v. Commissioner of Incometax [1997] 105 STC 188 (SC); [1997] 225 ITR 383 (SC) penalty levied under section 17(3) of the Madhya Pradesh General Sales Tax Act, 1958 for use ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....stinguished. In that case, the question as to whether the provisions of section 13(2) of the Act contains the provision of penalty or interest was not examined. Since the liability is definite and automatic leaving no discretion to the authority for sufficient cause of default it was held that the appellate authority has no power to reduce or waive the amount payable under section 13(2). In another decision given in the case of Sha Ghelabhai Devji and Company v. Assistant Commissioner of Commercial Taxes (Assessment) [1986] 62 STC 418 (Kar)[App.] (referred to above) this Court came to the conclusion that the term penalty used in section 13 is to be construed as interest and only a simple amendment of section 13 of the Act by substituting th....