TaxTMI 
TaxTMI 
2019 (8) TMI 1362
X X X X Extracts X X X X
X X X X Extracts X X X X
....e file of the second respondent herein. During these two relevant Assessment years, the petitioner had effected sales of REP licences. The petitioner was finally assessed to tax on a total and taxable turnover of Rs. 1,49,61,189/- on 31.01.1995 for the Assessment Year 1993-94 and Rs. 7,52,77,349/- and Rs. 93,02,531/- on 29.04.1996 for the Assessment Year 1994-95. The second respondent had revised the assessment by levying tax on the premium received by the petitioner, on transfer of REP licences on 30.12.1997 for the year 1993-94 and on 25.03.1997 for the year 1994-95. The petitioner had paid the tax demanded. b) Thereafter, on 31.03.1999, the second respondent levied interest for the period from 20.12.1993 till 17.12.1997 (date of payment of tax) for the Assessment Year 1993-94. Likewise, for the periods 06.05.1997 to 28.05.1997 and 06.05.1997 to 10.06.1997, interest was levied for the Assessment Year 1994-95. c) As against the interest levied, revision petitions came to be filed before the Deputy Commissioner on the ground that interest would be leviable only after assessment is made and demand is raised and since the petitioner had paid the entire tax before the due dates,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tax portion, for which a decision of this Court in the case of M/s.Karthik Roller Flour Mills V. The State of Tamil Nadu [W.P.No.6777 of 2001] was relied upon. Thus, he would submit that the interest cannot be demanded for belated payment on additional sales tax, since there is no substantial provision in the Act itself, as well as for penalty. 7. The learned Special Government Pleader, on the other hand submitted that in view of the interim orders of stay granted by the Hon'ble Supreme Court, the assessment orders were passed by keeping the levy of tax on the sales of REP licence, in abeyance. In view of the stay by the Hon'ble Supreme Court, the exemption was allowed, by retaining their liberty to reopen, as and when the orders are received in the case before the Hon'ble Supreme Court. The learned Special Government Pleader submitted that the law on the liability to pay tax on sales of REP licences was laid, as early as on 04.04.1994, in the case of P.S. Apparels V. Deputy Commercial Tax Officer reported in 94 STC 139 and it is in view of the interim stay order of the Hon'ble Supreme Court that the Assessing Officer was restrained from proceeding further. Similar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sing Officer had issued a notice proposing to levy tax on the sales of REP licences for the aforesaid assessment years, the petitioner had raised objections through their reply, stating that they had obtained a stay from the Hon'ble Supreme Court of India, wherein the question as to whether REP licences would constitute goods, was pending. 10.3. The petitioner had also filed a Special Leave Petition before the Hon'ble Supreme Court and the Assessing Officer had deferred the assessment in respect of REP licences for the year 1993-94 and had granted exemption for the year 1994-95 by his proceedings dated 31.01.1995 and 29.04.1996 respectively. 10.4. On 01.05.1996, the case of M/s.Vikas Sales Corporation reported in 102 STC 106 was decided by the Hon'ble Supreme Court, wherein REP licences were held to be goods. In this background, the Assessing Officer had proposed to redetermine the total and taxable turnover of the petitioner by adding the premium received on the sales of REP licences, to which the petitioner did not file their objections. Ultimately, when the revised assessment was made on 30.12.1997 for the year 1993-94 and on 25.03.1997 for the year 1994-95, the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....question of charging interest. If such an interpretation is not placed and if the Revenue's plea is accepted serious anomalies would surface." 13. The learned counsel for the petitioner had also placed reliance on the decision of M/s.EID Parry (India) Limited (supra) on the following observations:- "The word "turnover" has been defined under Section 2(r) to mean the aggregate amount for which the goods are bought and sold. Under Section 13(2) the monthly return has to indicate the actual turnover and tax is then payable as per the return. If the return shows the actual turnover and tax is not paid as per the return, then interest would be payable under Section 24(3) as that would be a case where amount has remained unpaid after the date specified for its payment. However, if the monthly return does not indicate the actual turnover then it was for the Assessing Authority to make a demand on the footing that the return was incomplete or incorrect. In the absence of any such demand interest would not become payable under Section 24(3) as there is no provision for charging of interest prior to the date of demand. " 14. By relying on the aforesaid observations and the principl....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and pre-requisite, it cannot be claimed that the culpability or bona fides of the assessee are totally strange concepts even while considering the levy of penalty under section 12(4) and 12(5) of the Act. As rightly held by the Division Bench in the decision reported in (1992) 1 MTCR 81; (printed at page 157 infra) (State of Tamil Nadu v. Indian Silk Traders) though the element of deliberateness, wilfulness or blameworthy conduct on the part of the assessee may not be necessary for invoking section 12 or 12(5) yet the bona fides of the assessee requires to be gone into before imposing the penalty since the underlying intent of penalty is only to deal with the non-disclosure of a turnover which with the oblique purpose of evading liability or postponing the payment of tax lawfully due to the State. Viewed thus, we are unable to come to the conclusion that levy of penalty is warranted at least for the period prior to the date on which the department has first made publicly known its mind to bring to tax transactions of this nature. The respondents have made it known that the transactions of the nature under consideration are liable to be taxed at some point of time during the asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... apart, we are also in respectful agreement with the view expressed by the Division Bench of the Karnataka High Court in the decision reported in [1992] 86 STC 175 (Bharat Fritz Werner Ltd. v. Commissioner of Commercial Taxes). 18. We summarize our conclusions as hereunder: (a) REP licences/exim scrips are "goods" in etymological sense and in common parlance as also within the meaning of section 2(1) of the TNGST Act, 1959 and section 2(d) of the CST Act, 1956; (b) The transfer, sale or assignment of those licences for value or consideration shall be liable to levy of sales tax under the sales tax laws in force in the State. The sales to and purchase by designated banks are also subject to levy of tax; (c) The respective assessing authorities shall be at liberty to proceed in the matter further after giving a further opportunity to make representations by the assessees and in accordance with law, in cases where the proceedings have not been already finalised; (d) Wherever the proceedings have culminated in an order of assessments made already by the competent assessing authorities, the petitioners/assessees shall be at liberty to pursue their statutory remedies of appeal/....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the High Courts, the Hon'ble Supreme Court had only affirmed the views of the High Courts holding that REP licences constitute goods. 17. The Assessing Officer had also, while holding that the sales on REP licences are liable to tax, observed that the Hon'ble Supreme Court of India had also affirmed such liability. Touching upon this aspect, the revisional authority had placed reliance on the West Bengal Taxation Tribunal in the case of M/s.Shivdham Wood Products Private Limited (supra) and held that the petitioner would be liable to pay interest on the tax in respect of sales of REP licences from 01.05.1996, which is the date on which the Hon'ble Supreme Court had decided that REP licences would constitute goods in the case of M/s.Vikas Sales Corporation (supra). 18. The learned counsel for the petitioner attempted to convince this Court stating that the above decision of the West Bengal Taxation Tribunal is distinguishable for the reason that in the said case, the levy of tax on REP licences was challenged after assessment was made and tax was levied on sales of REP licences and therefore the Tribunal had held that the applicant would have paid the tax after the de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e as to whether, interest is liable to be paid for the period when the respondents were restrained from levying any interest in view of the interim stay orders, for which purpose, the learned Standing counsel relied upon the decision of the Hon'ble Supreme Court in the matter of Calcutta Jute Manufacturing Company and another V. Commercial Tax Officer and others and other appeals reported in 1997 (106) STC 433 (SC), wherein it was held as follows: "15. But the position here is explicitly distinguishable from the factual situation in M/s JK Synthetics ltd. Here, nobody had doubt that if section 6B of the Act was called the tax was payable on the turnover. It was the Constitutional Validity of Section 6B which was challenged by the appellants in the earlier writ petitions before the Calcutta High Court and which finally ended up in upholding of it s validity. Hence, there was no question of the assess waiting for the determination and the turnover as there was no dispute on that aspect. The fact that appellants questioned the constitutional validity of the charging provision cannot be equated with a dispute whether the freight paid would also form part of the sale amount. It ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was no certainty on the decision to be taken in the issue as to whether there is liability cast on the petitioner, in view of the interim orders granted by the Hon'ble Supreme Court. The clarification came only after the final orders were pronounced in favour of the department. Moreover in Calcutta Jute Manufacturing Company's case (supra), the validity of Section 6(B) imposing a tax on the actual aggrieved turn over of the dealer whose gross turn over exceeds Rs. 50 lakhs, was under challenge. The Hon'ble Apex Court, while distinguishing the factual situation in M/s.J.K. Synthesis limited Case (supra) held that when nobody had doubted that if Section 6(B) is valid, the tax was payable on the turn over and therefore, there was no question for the assessee to wait for the determination as there was no dispute on that aspect. Whereas in the instant case, though this Court had held that REP licences are taxable, the Hon'ble Supreme Court had found a prima facie case in favour of the petitioner and stayed levy of taxes on REP licenses. During such pendency, there was an aspect of uncertainty. The Assessing Officer could not also have proceeded further in view of the in....