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2008 DIGILAW 88 (JK)

Darshan Kumar & Co. v. Dy. Commissioner, Sales Tax (Appeals) Jammu

2008-03-29

Vinod Gupta

body2008
1. The petitioner/assessee is engaged in supply of empty bottles, empty tins and rectified spirit and is a registered dealer under the J&K General Sales Tax Act, 1962 (hereinafter referred to as `the State Act' in short) & Central Sales Tax Act, 1956 (hereinafter referred to as `the Central Act' in short). The Assessing Authority, Sales Tax, Circle-D, Jammu (hereinafter referred to as "the Assessing Authority" in short) framed assessment orders under section 7(8) of the State Act and under section 9(1) of the Central Act and created tax liabilities and also levied interest besides imposing penalty under section 17 (1) (b) of the State Act for the accounting years 1984-85 and 1985-86 and 1986-87. 2. The petitioner/assessee being aggrieved by these orders of the Assessing Authority preferred seven appeals before the Dy. Commissioner, Sales Tax (Appeals), Jammu (hereinafter referred to as "the Appellate Authority" in short) and the same were decided by a common order on 23-04-1992 whereby the penalty imposed under section 17(1)(b) of the State Act for the accounting year 1984-85, was set aside as the order being non speaking order. However, the Appellate Authority remanded the case back after setting aside the assessment orders with a direction to the Assessing Authority to assesss the tax @ 4% and to examine the contention of the petitioner/assessee for adding freight charges in the taxable turnover by the Assessing Authority on old bottles. 3. The petitioner/assessee has assailed the impugned order before the learned Commissioner, Sales Tax, J&K through the medium of this revision petition on following grounds:- 1. that the order under revision is against law and facts of the case. 2. that the learned Deputy Commissioner has not been justified in not accepting the submissions of the appellant that on the sales of old bottles no tax can be imposed upon the appellant in view of section 82-A of CST Act. 3. that the learned appellate authority has not been justified in holding that old bottles on which tax stands already paid are generally exempt from the levy of sales tax. This finding of the learned appellate authority is clearly against the provisions of the Sales Tax Act in view of Sec. 41 of GST Act, it cannot be held that old bottles are generally exempted. 4. This finding of the learned appellate authority is clearly against the provisions of the Sales Tax Act in view of Sec. 41 of GST Act, it cannot be held that old bottles are generally exempted. 4. that one copy of assessment order is enclosed for both the years as only one copy of the assessment order has been issued to the appellant by the appellate authority. 5. that on the facts and circumstances of the case the learned Deputy Commissioner has also not been justified in not accepting the submissions of the appellant that the provisions of sec. 8 (8) are not applicable and interest has wrongly been imposed upon the appellant. 6. Any other ground which may be urged and allowed at the time of arguments. 4. This revision petition was transferred to this Tribunal by the learned Commissioner, Sales Tax, J&K in pursuant to the amendment made to Section 12(1) of the State Act by the J&K GST (Amendment) Act, 2000. 5. I have heard the learned counsel for the parties and have also perused the record on the file. 6. Mr. S. Dutt, Advocate, appearing for the petitioner/assessee, has contended that the petitioner/assessee has not been assessed properly as no tax can be imposed on old bottles and the levy of interest in all these cases is not justified. Mr. M. A Bhat, Advocate appearing for the revenue, on the other hand, has argued that the order passed by the learned Appellate Authority is in consonance with law and does not require any interference. 7. The learned counsel for the petitioner/assessee has contended that the learned Appellate Authority was not justified in holding that old bottles on which tax has already been paid are exempted from the levy of sales tax. On the other hand the learned counsel for the respondent has contended that the tax was paid earlier on the liquor and not on the bottles. There is nothing on record to show that the tax had already been paid on old bottles and thus the same are exempt from the payment of tax. However, the learned Appellate Authority has accepted the contentions of the learned counsel for the petitioner/assessee about the rate of tax applicable and also the inclusion of freight charges in taxable turnover and remanded the case back to the Assessing Authority for making fresh assessment orders. However, the learned Appellate Authority has accepted the contentions of the learned counsel for the petitioner/assessee about the rate of tax applicable and also the inclusion of freight charges in taxable turnover and remanded the case back to the Assessing Authority for making fresh assessment orders. In such circumstances the contention of the learned counsel for the petitioner/assessee cannot be accepted. 8. The learned counsel for the petitioner/assessee has also argued that the levy of interest is not justified in the matter. He has argued that the amount of interest is payable when the amount due is determined. In support he has relied upon the case reported in 16 STC 318. Rebutting this contention, the learned counsel for the respondents has stated that the amount due is amount of tax payable and in support he has relied upon cases reported in 56 STC 212 and 214. 9. In order to appreciate the respective contentions raised at the bar, the relevant provisions of Section 8(2) and 8(8) of the Act are reproduced as under:- 8(2):- "If the tax or any other amount due under this Act ( excluding interest) is not paid by the dealer or any other person, by whom it is payable within the period (allowed), the dealer or such other person shall be liable to pay interest on the tax or other amount from the date it was payable to the date of actual payment at the following rate:- (a) If the default is for the period not exceeding six months at 2% per Month (b) If the default is for a period exceeding six months at 3% per month. 8(8):- Notwithstanding anything contained in this Act, but subject to the provisions of sub section (5) of section 16-C of this Act, if a dealer fails to pay the quarterly tax under this section he shall be liable to pay interest on the tax from the date it was payable to the date of actual payment at the rates prescribed in sub-section (2) of this section and the provisions of section 16 and 16-A shall apply mutatis mutandis to the recovery thereof. Explanation 1: -- Quarterly tax means the tax payable on the basis of a quarterly return required to be furnished under sub section (2) of section 7 or the tax determined for a quarter. Explanation 1: -- Quarterly tax means the tax payable on the basis of a quarterly return required to be furnished under sub section (2) of section 7 or the tax determined for a quarter. Explaination 2: -- Interest under sub section (2) of this section on the extra tax payable on the basis of revised return, shall be payable from the date next following the date on which the tax was payable on the basis of original return. 10. From the plain reading of these provisions, it appears that the liability to pay interest arises from the date on which dealer fails to pay the tax or any other amount due under the Act within the period aallowed or when the dealer fails to pay the quarterly tax from the date it was payable. 11. In The words "amount due" and the date from which the interest is levied has been discussed by the Hon'ble Supreme Court in number of cases. I shall discuss few cases hereinafter. In case State of Rajasthan and Ors. V/s Ghasi Lal, 16 STC 318 (SC), it was held that till the tax payable is ascertained by the Assessing Authority or by the assessee himself no tax can be said to due because till then there is only a liability to be assessed to the tax. Again in case of Associated Cement Co. Ltd. V/s Commercial Tax Officer, Kota, (1981) 48 STC 466 (S.C), it was held that the statutory liability to pay interest under the Act arises where ever there is default in payment of tax within the period allowed by law irrespective of any doubt which an assessee may be entertaining about the liability to pay the tax. Either by delaying the filing of the return or not filing the return at all or by filing a return wrongly claiming that the certain part of the turnover is not taxable or by not disclosing the a part of the taxable turnover in the return an assessee cannot escape the liability to pay interest on the amount of tax withheld as a consequence of his own action or inaction from the last date or which it has to be paid as per the provisions of the law. The amount of interest has no doubt to be calculated after actual amount of tax payable is assessed and necessary adjustments are made Further in case, Commissioner of Sales Tax V/s Qureshi Crucible Centre, (1993) 89 STC 467 (S.C), it was held that a dealer shall have to deposit the tax admittedly payable either within the time prescribed or by the operation of law and failure to deposit tax the liability to pay interest arises. It does not require a separate order as such by any authority. It was further held that where a dealer calculated the tax at a rate not applicable the dealer could not plead ignorance of the change in the rate of tax effected two years earlier. Again in case JK Synthetics Ltd. V/s Commercial Taxes Officer, (1994) 94 STC 422 (SC), it was held as under:- "Therefore, the expression "tax payable" under the said two sub-sections is the full amount of tax due and "tax due" is that amount which becomes due ex hypothesi on the turnover and taxable turnover "shown in or based on the return". The word "payable" is a descriptive word, which ordinarily means "that which must be paid or is due, or may be paid" but its correct meaning can only be determined if the context in which it is used is kept in view. The word has been frequently understood to mean that which may, can or should be paid and is held equivalent to "due". Therefore, the conjoint reading of sections 7(1), (2) and (2A) and 11B of the Act leaves no room for doubt that the expression "tax payable" in section 11B can only mean the full amount of tax which becomes due under sub sections (2) and (2A) of the Act when assessed on the basisof the information regarding turnover and taxable turnover furnished or shown in the return. Therefore, so long as the assessee pays the tax which according to him is due on the basis of information supplied in the return filed by him, there would be no default on his part to meet his statutory obligation under section 7 of the Act and, therefore, it would be difficult to hold that the " tax payable" by him "is not paid" to visit him with the liability to pay interest under clause (a) of section 11B. It would be a different matter if the return is not approved by the authority but that is not the case here. It is difficult on the plain language of the section to hold that the law envisages the assessee to predict the final assessment and expect him to pay the tax on that basis to avoid the liability to pay interest. That would be asking him to do the near impossible." 12. From the law provided in section 8(2), 8(8) and the Authorities mentioned above, it emerges that the interest is levied on the tax or other amount from the date it was payable to the date of actual payment where such tax was not paid by the dealer or any other person by whom it was payable within the period allowed or by peration of law. If the dealer fails to pay the tax or other amount assessed within the period allowed, the liability to pay interest arises. However, the liability to pay interest also arises when the dealer fails to pay tax as required under law. Section 7(2) of the Act mandates a dealer to furnish quarterly return alongwith payment of tax for each quarter within thirty days from the expiry of that quarter. The law creates liability to pay admitted tax on the disclosed turnover in the return. If the dealer fails to comply with this mandatory requirement of law, the dealer is liable to pay interest. Thus the date from which interest is levied is from the date on which it was due or in other words when the dealer fails to pay when it is assessed or demanded or when the dealer fails to discharge his statutory obligations to pay tax. The Hon'ble Supreme Court while dealing the provisions of the State Act in cases of Royal Boot House V/s State of J&K, (1984) 56 STC 212 and Khajan Chand V/s State of J&K, 1984 56 STC 214 , the cases cited by the learned counsel for the Revenue took the view that interest is properly levied because the dealer committed default by not dispositing the amount of tax from the last date for filing the quarterly return prescribed under the Act. 13. 13. In the instant case in number of cases the petitioner/assessee has not submitted his quarterly returns in time and deposited the tax in time prescribed by the Act and the Rules framed thereunder and in such circumstances levy of inerest was justified. However, where the T.T.O of the petitioner/assessee as stated in the returns has not been accepted and the same was determined after disallowing the claims of the petitioner/assesseee in certain cases, the interest cannot be charged for the period before assessment is made and the petitioner/asssessee is allowed time to deposit the same. The amount of interest in each case is not clear. 14. With these observations this revision petition is disposed of and the Assessing Authority is directed to assess the levy of interest afresh alongwith the grounds of remand made by the Appellate Authority. The file of revision petition be consigned to records and the record of lower authorities be sent back forthwith.