AI Drafter 
TaxTMI 
TaxTMI 
2019 (9) TMI 172
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....the Constitution of India, the writ applicant, a public limited company, has prayed for the following reliefs : "(A) YOUR LORDSHIPS may be pleased to issue writ of Mandamus or any other appropriate writ, order or direction quashing and setting aside the assessment order dated 10.10.2017 passed by the Respondent No.2 for the period 1994-95 in so far as non granting of interest on refund is concerned. (AA) YOUR LORDSHIPS may be pleased to issue writ of Mandamus or any other appropriate writ, order or direction quashing and setting aside the order dated 03.08.2019 passed by the Respondent No.2 under Sec. 54 of the Gujarat Sales Tax Act, 1969 for the period 1994-95. (B) YOUR LORDSHIPS may be pleased to issue writ of Mandamus or any other appropriate writ, order or direction directing the Respondent Authority to grant interest on delayed refund as per the provisions contained in Section 54(1)(aa) of the Gujarat Sales Tax Act, 1969. the said interest may be directed to be paid from the date of closure of the accounting year / date of payment of tax till the date of order of assessment. (C) Such other and further relief/s as may be deemed just and prope....
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....ing the Tax Appeals Nos.748, 749, 750 and 751 of 2018 respectively. This Court while dismissing all the four appeals preferred by the State of Gujarat held as under : "4. Shri Pranav Trivedi, learned Assistant Government Pleader appearing on behalf of the appellant has submitted that as such, the Revenue is aggrieved by the impugned decision of the learned Tribunal holding that the respondent is entitled for claim of interest on refund which may be allowable under Section 54(1)(aa) of the Gujarat Sales Tax Act, 1969. When the attention of the learned Assistant Government Pleader was drawn to the decision of the Division Bench of this Court in the case of State of Gujarat v. Doshi Printing Press - [2015]82 VST 384 (Guj.) and a similar decision in the case of State of Gujarat v. Star Industries - Tax Appeal No.222/2015 by which in the aforesaid decisions it is held that the Dealer shall be entitled to interest under Section 54(1)(aa) of the Gujarat Sales Tax Act, 1969, on refund arising from the appellate order, Shri Pranav Trivedi, learned Assistant Government Pleader has submitted that facts in the present case are distinguishable to the facts of the case in State of Gujar....
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.... Rs. 88,93,061 towards labour expenses. The purchases from registered dealers are Rs. 5,82,59,328. Goods received through branch transfers are Rs. 17,02,42,705. OGS purchases are Rs. 93,03,122. There are no purchases liable to purchase tax. Total tax is assessed at Rs. 3,10,72,166 which includes sales tax Rs. 2,12,44,028, turnover tax Rs. 46,06,271 and tax on specified sales Rs. 52,21,867. Interest assessed on late payment of tax is Rs. 1980. Assessed total tax is Rs. 3,10,74,146 from which tax paid with returns Rs. 3,01,94,513 is given credit, therefore, balance Rs. 8,79,633 remains outstanding. Interest at the rate of 2% for 36 months assessed on outstanding dues is Rs. 6,33,336. Penalty levied under Sec. 45(4) is Rs. 250. In the end outstanding amount remains at Rs. 15,13,219. As against the same Rs. 1,42,26,438 paid by the dealer as per the order of the Hon'ble Gujarat High Court is given credit which gives rise to refund of Rs. 1,27,13,219. Refund has arisen for the amount paid by the dealer pursuant to the order of Hon'ble Gujarat High Court. The Hon'ble Tribunal has directed to grant refund with interest in the case of the dealer. However, as per letter Out....
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....edi, learned Assistant Government Pleader has submitted that facts in the present case are distinguishable to the facts of the case in State of Gujarat v. Doshi Printing Press and others. It is submitted that in the present case, refund has arisen because of the order passed by the Hon'ble Supreme Court in determination proceedings which shall not be akin to even appellate proceedings. The aforesaid is not factually correct. In the present case, the proceedings before the Tribunal were against the order passed by the first appellate authority levying/ charging tax at the rate of 15% against the claim of the Dealer at 5%. In the meantime and during the pendency of the proceedings before the Tribunal, in another proceeding, including in the case of the very Dealer, the Hon'ble Supreme Court held that the Dealer shall be entitled to interest under Section 54(1) (aa) of the Gujarat Sales Tax Act, 1969, on refund arising from the appellate order. Consequently, by impugned order, the learned Tribunal has allowed the appeals by holding that the Dealer shall be liable to pay tax at the rate of 5%. Therefore, as such, the impugned orders passed by the learned Tribunal wherein the appeals ag....
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....d to calculate the figure to be paid towards the interest. On the next date of hearing the calculation shall be placed before this Court without fail. By next date of hearing, if we find that no interim order is passed by the Supreme Court, we shall direct the respondent either to disburse the amount or ask the respondent to deposit the requisite amount with the Registry of this Court." 3.4 Pursuant to our directions as contained in the order dated 10.07.2019 referred to above, the amount to be paid towards interest has been calculated. According to the respondents, the total amount due and payable in all the writ applications comes to Rs. 70,83,338/- (Seventy Lac Eighty Three Thousand Three Hundred Thirty Eight). We have been provided with a chart of calculation of the amount towards interest. This chart is a part of the affidavit-in-reply filed on behalf of the respondents. In the affidavit-in-reply, the following has been stated : "2. I say and submit that for the assessment year 1994- 95, the respondent authorities in its order dated 03.08.2019 has calculated the interest for an amount of Rs. 26,38,690/-. It is further required to be noted that for the assessment ye....
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..... The said amount of tax was paid by the petitioner after the assessment orders were passed. Resultantly, the proviso appended to the said sub-section has a complete applicability. It is further required to be noted that as per the tabular chart which is annexed with this affidavit, the petitioner has made payment of the tax amount for the assessment year 1994-95 after the assessment order was passed on 30.04.1999, for the assessment year 1995-96 the assessment order was passed on 15.03.2000 as well as for the assessment year 1996-97 the assessment order was passed on 31.08.2001. considering the said proviso appended to Sub-section (1) of Section 54, the authorities would be entitled to pay interest on refund from the actual date of payment of tax and not from the respective assessment order as contended by the petitioner. I say and submit that the authority has also deducted the period in litigation considering the third proviso appended to Section 54(1)(aa) for the sake of convenience is reproduced herein below which clearly specifies that interest shall not be payable when any litigation are pending which affects the subject matter of the interest in a court of law : "(....
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....y four per cent per annum, on the said amount from the date immediately following the date of closure of the accounting year to which the said amount relates to the date of order of assessment : PROVIDED that where dealer has paid any amount after the closure of the accounting year and such amount is required to be refunded, no interest shall be payable for the period from the date of closure of such accounting year to the date of payment of such amount : PROVIDED FURTHER that no interest shall be payable on the amount of refund which does not exceed rupees one hundred. Explanation : For the purposes of this clause, the expression "specified year" means - (i) the financial year commencing from the 1st April, 1993; (ii) the calendar year commencing from the 1st January, 1993; (iii) Samvat year 2049 commencing from the Kartak sud ekam, or (iv) co-operative year commencing from 1st October, 1993, or (v) any such year thereafter. (a) where an amount required to be refunded by the Commissioner to any person by virtue of an order of assessment under section 41 is not so refunded to him with in a period of th....
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.... invoked the third proviso to Section 54 while calculating the amount to be paid towards interest. He submitted that the third proviso talks about the interest which is not to be paid in case if an appeal or revision application is filed or where an application has been made to the Tribunal to refer it to the High Court on any question of law. According to Mr.Mehta, the third proviso has nothing to do with Section 54(1)(aa). The third proviso, according to Mr.Mehta, would be applicable to Section 54(1)(a) and (b) respectively. Mr.Mehta submitted that the impugned order dated 03.08.2019 granting interest on the refund is not in consonance with the provisions contained in Section 54(1)(aa) of the Act, as the said Section prescribes or rather provides that the dealer shall be entitled to receive simple interest @ 9% per annum on the amount of refund from the date immediately following the date of closure of the accounting year to which the said amount relates to the date of order of assessment. 4.2 Mr.Mehta pointed out that the first proviso to Section 54(1)(aa) provides that is the dealer has paid any amount after the closure of the accounting year and such amount is required to b....
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....ng which the First Appeal as well as the appeal before the Tribunal was pending will have to be excluded for the purpose of calculating the amount to be paid towards interest. According to Ms.Mehta, that is the true purport of the third proviso. Ms.Mehta submitted that considering the third proviso to subsection (1) of Section 54, the authority would be obliged to pay interest on refund from the actual date of payment of tax and not from the respective assessment order as asserted by the writ applicant. 6. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the third proviso to Section 54 would be applicable to sub-clause (1)(aa) of Section 54. 6.1 It is well established that the proviso of a statute must be given an interpretation limited to the subject-matter of the enacting provision . Reliance is placed on the decision of this Court rendered by four Judge Bench in Dwarka Prasad v. Dwarka Das Saraf (1976) 1 SCC 128 : (AIR 1975 SC 1758), the relevant para 18 of which reads thus: "18. ... A proviso must be limited to the subject-matter of the enactin....
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..... (h) A construction placed upon a proviso which brings it into general harmony with the terms of section should prevail. (I) When a proviso is repugnant to the enacting part, the proviso will not prevail over the absolute terms of a later Act directed to be read as supplemental to the earlier one. (j) A proviso may sometimes contain a substantive provision. xxx xxx xxx 6.3 In Ishverlal Thakorelal Almaula v. Motibhai Nagjibhai (AIR 1966 SC 459) it was held that the main object of a proviso is merely to qualify the main enactment. In Madras and Southern Mahrata Railway Co. Ltd. v. Bezwada Municipality (AIR 1944 PC 71), Lord Macmillan observed thus: "The proper function of a proviso is to except and deal with a case which would otherwise fall within the general language of the main enactment, and its effect is confined to that case." 6.4 The above case was approved by this Court in CIT v. Indo Mercantile Bank Ltd. (AIR 1959 SC 713), where Kapur, J. held that the proper function of a proviso was merely to qualify the generality of the main enactment by providing an exception and taking out, as it were, from the main enactment a portion whic....
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....delay attributable to him shall be excluded from the period for which interest is payable. If the third proviso as invoked by the respondents is not applicable and could not have been invoked, the entire calculation of the amount by wrongly excluding the period would be incorrect. 7. In such circumstances referred to above, the order dated 03.08.2019 passed by the respondent No.2 is not sustainable in law and is hereby quashed and set aside. The entire exercise will have to be undertaken afresh keeping in mind what has been observed by this Court in this judgement, more particularly, the fact that the third proviso could not have been invoked as the same is not applicable. In the peculiar facts of the case and also having regard to the fact that this is a long drawn litigation, this time we direct the Commissioner himself to look into the matter afresh. The Commissioner shall look into the observations made by this Court as well as the chart of the calculation of the amount as provided by the writ applicant and which has been incorporated in this Judgement. We direct that let there be a fresh determination of the amount to be paid towards interest in light of what has been ob....