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2012 DIGILAW 700 (BOM)

Taurus Auto Dealers Pvt. Ltd. v. D. P. Amberao

2012-03-29

D.Y.CHANDRACHUD, M.S.SANKLECHA

body2012
Judgment M.S. Sanklecha, J. This petition under Article 226 of the Constitution of India challenges an Order dated 23 September 2011 passed by the Deputy Commissioner of Sales Tax (Respondent No.1) imposing interest on the Petitioner No.1 under Section 30(4) of the Maharashtra Value Added Tax Act 2002 (hereinafter referred to as the “Act”). 2 Briefly, the facts leading to the present petition are as under: a) Petitioner No.1 is a company engaged in the business of buying and selling motor vehicles and spare parts at Pune. Petitioner No.2 is its Director. Respondent No. 1 is the Deputy Commissioner of Sales Tax (VAT) exercising jurisdiction over Petitioner No. 1 under the Act. Respondent No.2 is the State of Maharashtra. b) Petitioner No.1 is registered as a dealer under the Act for the financial years 2005-06; 2006-07 and 2007-08. In the course of its business as a dealer under the Act, Petitioner No.1 is discharging its tax dues in accordance with its returns furnished to the Respondents under the Act. c) Petitioner No.1 in the regular course of its business as a dealer filed its Returns and paid tax in accordance with the returns under the Act. For the financial year 2005-06 , 2006-07 and 2007-08 Petitioner No.1 had filed its return and paid sums of Rs.5,83,79,766/-, Rs.8,06,25,026/-and Rs.8,85,54,022 respectively. d) On 1st July 2009 the Act was inter alia amended by Maharashtra Act No. XVII of 2009. By Section 7 of Maharashtra Act No. XVII of 2009, sub section (4) to Section 30 of the Act was introduced. Maharashtra Act No. XVII of 2009 provides that Section 7 thereof will come into force with effect from 1 July 2009. Sub section (4) of Section 30 as introduced into the Act reads as under: “(4) if - (a) After the commencement of,- (i) audit of the business of the dealer in respect of any period , or (ii) inspection of the accounts, registers and documents pertaining to any period, kept at any place of business of the dealer, or (iii) entry and search of any place of business or any other place where the dealer has kept his accounts, registers, documents pertaining to any period or stock of goods. (b) in consequence of any intimation issued under sub section (7) of section 63, the dealer files one or more returns or, as the case may be, revised returns in respect of the said period, then he shall be liable to pay by way of interest, in addition to the amount of tax, if any, payable as per the return or, as the case may be, revised return, a sum equal to 25 per cent, of the additional tax payable as per the return or, as the case may be, revised return.” e) On 8th July 2009 audit of the first petitioner’s activities for the years 2005-06, 200607 and 2007-08 under the Act was undertaken by the Deputy Commissioner of Sales Tax. Consequent to the audit, a letter of intimation under Section 63(7) of the Act determining the additional tax payable for 2005-06 at Rs.14,23,240/-, for 2006-07 at Rs. 12,05,048/-and for 2007-08 at Rs.15,10,128/-aggregating to Rs. 41,38,416/-was sent to the Petitioner. f) On 20 August 2009 petitioner No.1 filed revised returns and also paid further tax under the Act for the three years viz. 2005-06, 2006-07 and 2007-08 aggregating to Rs.41,38,416/-. Petitioner No.1 also paid interest on late payment of the tax under the Act under Section 30(3) of the Act. g) On 13 July 2011, the Deputy Commissioner of Sales Tax issued show cause notices calling upon Petitioner No.1 to show cause why interest under Section 30(4) should not be imposed for the years 2005-06, 2006-07 and 2007-08. The basis of the above notices was that under Section 30 (4) of the Act an amount equal to 25 per cent of the additional tax payable in accordance with the revised returns, is required to be paid as interest. h) On 9 August 2011 Petitioner No.1 responded to the notices dated 13 July 2011 and inter alia pointed out that no interest could be imposed for the reason that Section 30(4) of the Act would not operate with retrospective effect for the period 2005-06, 2006-07 and 2007-08, as Section 30(4) came into effect only from 1 July 2009. Consequently, the demand for interest under Section 30(4) was asserted to be bad in law. Therefore, Petitioner No.1 requested that the proceedings for recovery of interest under Section 30 (4) of the Act be dropped. Consequently, the demand for interest under Section 30(4) was asserted to be bad in law. Therefore, Petitioner No.1 requested that the proceedings for recovery of interest under Section 30 (4) of the Act be dropped. i) Three Orders all dated 23 September 2011 were passed by the Deputy Commissioner of Sales Tax, each for the period 2005-06, 2006-07 and 2007-08 confirming imposition of interest under Section 30(4) of the Act. j) Being aggrieved by the three Orders dated 23 September 2011 the Petitioner No.1 preferred three appeals to the Joint Commissioner of Sales Tax (Appeal). On 19 November 2011 the Joint Commissioner of Sales Tax (Appeal) dismissed the three appeals as not maintainable under the Act. k) Consequent to the above, the Petitioners have filed the present petition seeking a Writ of Certiorari to quash and set aside the three orders dated 23 September 2011 passed by the Deputy Commissioner of Sales Tax imposing interest under Section 30 (4) of the Act. 3) On the aforesaid facts, Counsel for the petitioner in support of his contention that the Orders dated 23 September 2011 are unsustainable in law submitted as under: (a) this Court should exercise its writ jurisdiction as there is no alternative remedy available to Petitioner No.1 from the orders dated 23 September 2011 in view of clear prohibition for appeal under Section 85 of the Act; (b) Maharashtra Act No. XVII of 2009 which inter alia amended the Act by Section 7 thereof was effective only from 1 July 2009. Consequently, it could have no application in respect of tax payable for periods 2005-06,2006-07 and 2007-08; (c) The Orders dated 23 September 2011 are bad in law as they seek to apply Section 30(4) of the Act retrospectively for the period 2005-06, 2006-07 and 2007-08 for the period prior to Section 30(4) of the Act becoming effective; and (d) The reliance placed in the three Orders dated 23 September 2011 upon the decision of the Sales Tax Tribunal in the matter of Nitco Paints (P) ltd. dated 12 July 2010 (44MTJ 207) is misplaced and in any event the same has been set aside by this court on 10 June 2011 and remanded to the Deputy Commissioner for fresh adjudication. dated 12 July 2010 (44MTJ 207) is misplaced and in any event the same has been set aside by this court on 10 June 2011 and remanded to the Deputy Commissioner for fresh adjudication. 4) As against the above, Counsel for the Respondent does not dispute that there is no alternate remedy available to the petitioner in respect of the Orders dated 23 September 2011 imposing interest under Section 30(4) of the Act. However it is his contention that no writ be issued in the present case as the Orders dated 23 September, 2011 are perfectly just and valid. Counsel for the Respondent submits that the Orders dated 23 September 2011 do not apply Section 30(4) with retrospective effect inasmuch as the audit as well as intimation under Section 63(7) of the Act was given to the petitioner No.1 post 1 July 2009. Thus it his contention that the three Orders dated 23 September 2011 are in accordance with law and call for no interference. 5) We have considered the submissions. The only issue for consideration before this court is whether imposing/charging of interest under Section 30(4) of the Act in respect of the late payment of tax for the years 2005-06, 2006-07 and 2007-08 is valid in law. It is an undisputed position that sub section (4) of Section 30 of the Act came into force with effect from 1 July 2009 providing for imposition of interest at a flat rate at 25 per cent of the additional tax payable as per the revised returns. In the present case, the audit of the petitioner’s accounts under the Act for the years 2005-06, 2006-07 and 2007-08 took place on 8 July 2009. Intimation of short payment of tax under Section 63 (7) of the Act to Petitioner No.1 was made on 16 July 2009 by the Respondents. Consequent to the above Intimation, on 20 August 2009 the Petitioner filed revised returns for the years 2005-06, 2006-07 and 2007-08 and also paid the differential tax demanded consequent to the audit, aggregating to Rs.41,38,416/-along with interest thereon under Section 30(3) of the Act. Sub section (4) of Section 30 of the Act provides for interest at a flat rate of a sum equal to 25 per cent of the additional tax payable as per the revised returns. Sub section (4) of Section 30 of the Act provides for interest at a flat rate of a sum equal to 25 per cent of the additional tax payable as per the revised returns. It does not provide for charging of interest keeping in view the delay in paying the taxes but provides for a flat rate depending upon the quantum of additional tax payable consequent to filing of the revised return. The demand for interest is not for the period prior to 1 July 2009 as the interest is being charged not with regard to a delay (period/time wise) in making the payment of tax to the State but is charged at a flat rate of 25 per cent of the additional tax payable as per the revised returns. In the circumstances, in the present case, no interest is being charged for the period prior to 1 July 2009. Consequently, Section 30(4) of the Act is not being applied retrospectively. This is particularly so as all the acts leading to the demand of interest such as the audit, intimation letter under Section 63(7) of the Act, filing of revised returns and the payment of differential tax all took place after 1 July 2009. The contention of the Petitioner that Section 30(4) of the Act is being applied retrospectively in the present case because it deals with the short payment of tax in respect of the period 2006 to 2008 is not well founded for the reason that it is well settled that merely because a part of the requisites for an action is drawn from a time prior to its passing, that would not make the action retrospective. Therefore Section 30(4) of the Act was not being applied retrospectively. There was a non payment of additional taxes as on 1 July 2009 when Section 30(4) of the Act was introduced. 6) The submission of the Petitioner that reliance upon the decision of the Sales Tax Tribunal in the matter of Nitco Paints (P) ltd. dated 12 July 2010 (44 MTJ 207) is misplaced as the same has been set aside by this court on 10 June 2011 is not correct. This is for the reason that there were two issues before this Court in the matter of Nitco (supra). dated 12 July 2010 (44 MTJ 207) is misplaced as the same has been set aside by this court on 10 June 2011 is not correct. This is for the reason that there were two issues before this Court in the matter of Nitco (supra). The first issue dealt with imposition of penalty under the amended provision ( the amendment took place on 15 August 2008) dealing with the issue of omission to file audit report. In the above case the audit report was filed only on 31 August 2008 and it was held that the amended provision would apply as the omission to file the audit report continued up to 31 August 2008. The finding on the above issue was not disturbed by the Order dated 10 June 2011 of this Court. The second issue dealt with imposition of penalty without considering the response of the assessee for non imposition of penalty, ignoring the fact that the imposition of penalty is discretionary and it was on this issue that the matter was remanded to the Deputy Commissioner of Sales tax for fresh adjudication. Therefore the reliance upon the above decision in the three Orders dated 23 September 2011 is not misplaced and this Court has not disturbed the findings of the Sales Tax Tribunal in its Order dated 10 June 2011 on the first issue which alone is relevant to the present case. 7) From the record, we find that the Petitioners have annexed to the Petition two decisions of the Supreme Court in the matters of Hoosein Kasam Dada (India) Ltd. Vs. The State of Madhya Pradesh, reported in (1953) 4 STC 114 (SC) and J.K. Synthetics Ltd. Vs. CTO 94 STC 422 (SC). However, no submissions with regard to the aforesaid decisions were made during the course of the hearing. In any event, both the aforesaid decisions would not apply to the present facts. In the matter of Hoosein Kasam Dada (India) Ltd. (Supra) the issue was with regard to an amendment made in respect of filing an Appeal and in those facts, it was held that the amendment could not take away an accrued right of the party concerning the conditions for filing an Appeal. Similarly, in the case of J.K. Synthetics Ltd (Supra), the interest which was being demanded related to the delay in paying the Sales Tax. Similarly, in the case of J.K. Synthetics Ltd (Supra), the interest which was being demanded related to the delay in paying the Sales Tax. In the present case, the interest is being charged at a flat rate and has no relation to the length of time(delay) in making the payment of tax. 8) In view of the above, we do not find any merit in the contention that the three Orders dated 23 September 2011 passed by the Deputy Commissioner of Sales Tax have given retrospective effect to Section 30(4) of the Act. Consequently, we dismiss the petition with no order as to costs.