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2003 DIGILAW 155 (HP)

AMAR CHAND v. STATE OF H. P.

2003-06-21

M.R.VERMA, V.K.GUPTA

body2003
JUDGMENT V.K. Gupta, C.J. (Oral) - The contention of Mr. Khanna, learned Senior Advocate appearing for the petitioner is that the petitioner is not liable to pay interest even if prior to 8th January, 1999, the petitioner was in default with respect to the payment of tax or surcharge, if any, due from him under the H.P. Passengers and Goods Taxation Act, 1955. 2. H.P. Passengers and Goods Taxation Act, 1955 was amended by H.P. Passengers and Goods Taxation (Amendment) Act, 1998 which received the assent of the Governor on 4th January, 1999. This amendment Act came into force w.e.f. 3th January, 1999. By virtue of Section 2 of the Amendment Act, after Section 12 of the original 1955 Act, a new Section, being Section 12-A was introduced, clause (1) whereof provided that if any owner failed to pay the amount of tax or surcharge due from him under 1955 Act, he shall, in addition to the amount of tax or surcharge be also liable to pay simple interest, on the amount of tax or surcharge due and payable by him at the rate of one percent per month. Sub-section (1) of Section 12-A thus introduced reads as under :- "12-A. Payment of interest.- (1) If any owner fails to pay the amount of tax or surcharge due from him under this Act, exact to the extent mentioned in sub-section (2), he shall, in addition to the amount of tax or surcharge, be liable to pay simple interest on the amount of tax or surcharge due and payable by him, at the rate of one percentum per month, from the date (immediately following the last date on which the owner should have either filed the return or paid the tax or surcharge under this Act, for a period of one month and thereafter at the rate of one and a half percentum per month till the dealt continues." 3. Mr. Khannas contention is that the liability to pay interest as per Section 12-A (supra) would relate only to such delayed payment of tax or surcharge as would accrue after 8th January, 1999 and that this liability cannot and would not relate to any default in the payment of tax or surcharge as might have been in existence before 8th January, 1999. We are in total disagreement with his contention. We are in total disagreement with his contention. Even though Section 12-A being prospective in operation, and the liability to pay interest thereunder would arise only after 8th January, 1999, meaning thereby that prior to 8th January, 1999 even if an owner was in default with respect to the payment of the tax or surcharge, for any period prior to 8th January, 1999 with respect to any such default he would not be liable to pay interest but the liability to pay interest after 8th January, 1999 would certainly be attracted even if the default or the delayed payment relates to a period of time before 8th January, 1999. Only for the period prior to 8th January, 1999 he would not be liable to pay interest, which means that the reckoning of the interest liability would start only after 8th January, 1999. 4. In other words, in elaboration, what it means is that if the liability to pay tax or surcharge, or both, was incurred prior to 8.1.1999 (the date when Section 12-A came into force), the owner of a vehicle would not be liable to pay interest upon any such tax or surcharge liability as was incurred prior to 8.1.1999 right from the date of incurring such liability till 8.1.1999 because, admittedly Section 12-A is prospective in operation and hence cannot be applied retrospectively. To further elaborate, with respect to whatever tax or surcharge liability as was, or had been incurred prior to 8.1.1999, there will not be any corresponding liability to pay interest on such a liability for any period up to 8.1.1999, but such liability which was incurred prior to 8.1.1999, if it continues even after 8.1.1999, in the seen that the owner even after 8.1.1999 continues to be in default with respect to his liability to pay tax or surcharge which he had incurred prior to 8.1.1999, on and from 8.1.1999, with respect to any such liability, he would be liable to pay interest and on the question of liability to pay interest therefore, he shall be treated at par with any tax or surcharge liability which he incurs after 8.1.1999. If the contention of Mr. If the contention of Mr. Khanna is to be accepted, it would result in an anomalous and enigmatic situation because whereas, on the one hand an ownership incurs liability with respect to payment of tax or surcharge after 8.1.1999, would be liable to pay interest on such amount, another owner who had incurred such tax or surcharge liability prior to 8.1.1999 and yet after 8.1.1999 also does not liquidate such liability, and continues to remain in default, yet he will not be liable to pay interest on such liability even after 8J.1999. Such a situation is either comprehensible nor could be contemplated under Section 12-A (supra) nor does it commend to logic reasoning or even common sense. We have, therefore, no manner of doubt that even though Section 12-At prospective in operation and owner would be liable to pay interest any tax or surcharge liability which he had incurred prior to 8.1.1999, he would be liable to pay interest on such a liability post 8.1.1999 if the liability continues after this date. 5. Mr. Khanna, learned Senior Counsel appearing for the petitioner has relied upon a judgment of the Supreme Court in the case of India Carbon Ltd. v. State of Assam, reported in 1997(106) STC 460 in order to buttress his argument about the non-applicability of Section 12-A (supra) with respect to petitioners liability to pay interest for the period prior to 8.1.1999 on the amount of tax and surcharge for which he was, or might have been held, or declared as a defaulter. In this judgment their Lordships of Supreme Court were discussing the issue as to whether in the Central Sales Tax Act, 1956 there was any substantive provision for levy of interest on delayed payments or not. The issue involved for consideration in that case was whether, in the absence of a provision in the substantive law, interest could be levied on delayed payments or not. The following observations in para 6 of the judgment would indicate the gamut of the issue which had arisen for consideration in that case. We quote : "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. 6. The following observations in para 6 of the judgment would indicate the gamut of the issue which had arisen for consideration in that case. We quote : "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. 6. We reproduce para 7 of the judgment also which further elaborates this point: "This proposition may be derived from the above: interest can be levied and charged on delayed payment of tax only if the statute that levies and charges the tax makes a substantive provision in this behalf." 7. Ultimately in paras 13 and 14 of the judgment, their Lordships summed upon the legal position. We reproduce paras 13 and 14: "13. There is no substantive provision in the Central Act requiring the payment of interest on Central Sales Tax. There is, therefore, no substantive provision in the Central Act which obliges the assessee to pay interest on delayed payments of Central Sale Tax. 14. Now, the words "charging on payment of interest" in section 9(2) occur in what may be called the later part thereof. Section 9(2) authorizes the sales tax authorities of a State to assess, reassess, collect and enforce payment of the Central Sales Tax payable by a dealer as if it was payable under that States Act; this is the first part of Section 9(2). By the second part thereof, these authorities are empowered to exercise the powers thy have under the State Act and the provisions of the State Act, including provisions relating to charging and payment of interest, apply accordingly. Having regard to what has been said in the case of Khanna and Co., 1975(35) STC 571 (SC), it must be held that he substantive law that the States Sales Tax authorities must apply is the Central Act. In such application, for procedural purposes alone, the provisions of the State Act are available. The provision relating to interest in the later part of Section 9(2) can be employed by the States sales tax authorities only if the Central Act makes a substantive provision for the levy and charge of interest on Central Sales Tax and only to that extent. The provision relating to interest in the later part of Section 9(2) can be employed by the States sales tax authorities only if the Central Act makes a substantive provision for the levy and charge of interest on Central Sales Tax and only to that extent. There being no substantive provision in the Central Act requiring the payment of interest on Central Sales Tax the States Sales Tax authorities cannot, for the purpose of collecting and enforcing payment of Central Sales Tax, charge interest thereon." 8. We must very candidly observe that Mr. Khannas reliance upon the aforesaid judgment of the Supreme Court cannot be of any help to him in this case because in the aforesaid judgment, the ratio laid down was that the liability to pay interest, which is like the liability to pay tax or surcharge or penalty has to arise from, and is based upon a substantive law as would-be enacted by the legislature, and not based upon, or flowing from a procedural or what might be termed as "adjectival" law. It is nobodys contention in this case, as it cannot be, that Section 12-A (supra) is in the realm of procedural or adjectival law, even by the wildest stretch of imagination. Undoubtedly, Section 12-A (supra) is a substantive piece of legislation, finding as it does, its place in the plenary legislative enactment being H.P. Passengers and Goods Taxation Act, Section 12-A therefore, being a substantive law and the interest liability having been incurred on the basis of this substantive law, therefore, reliance placed by Mr. Khanna on the aforesaid Supreme Court judgment is totally misconceived and cannot be of any help to him in so far as assailing Section 12-A is concerned or putting an interpretation favourable to his client. 9. We have not gone into any factual question of the non-existence or existence of default prior to 8th January, 1999, since in this petition we have confined ourselves to the interpretation of Section 12-A (supra) only. 10. The petition is disposed of. CMP No. 1149/2003 In view of the dismissal of the Writ Petition, this application also stands dismissed. -