1966 (10) TMI 142 - HC - VAT and Sales Tax

Summary

Issues:
1. Liability of a public limited company to sales tax on sales conducted outside Uttar Pradesh.
2. Adjustment of refundable amounts against tax liabilities for different assessment years.
3. Jurisdiction of the Sales Tax Officer to impose penal interest under section 8(1-A).

Analysis:
1. The petitioner, a public limited company engaged in the business of jute goods, was assessed to sales tax under the U.P. Sales Tax Act for the assessment years 1948-49 and 1949-50. The turnover assessed included sales outside Uttar Pradesh made under railway receipts and on consignment basis. Various appellate and revision orders were passed regarding the liability of sales tax on transactions conducted outside the state. The High Court held that the turnover considered was liable to sales tax, and the petitioner appealed to the Supreme Court. Meanwhile, the petitioner was found liable to sales tax for the assessment years 1956-57 and 1957-58. The petitioner sought to adjust the refundable amounts from earlier years against the tax liabilities for the later years, which was rejected by the Sales Tax Officer. The petitioner challenged the recovery proceedings initiated by the Collector through a petition under Article 226 of the Constitution.

2. The first contention raised by the petitioner was that they were not in default as the total amount refundable for the earlier assessment years exceeded the total tax liability for the later years. The petitioner argued that the refundable amount should be considered a debt, and since it was greater than the tax liability, they could not be deemed in default. However, the Court held that the provisions of section 8(1) of the Sales Tax Act required actual payment of the tax assessed within the specified period, without allowing for set-off of cross debts. As the petitioner had not paid the tax assessed for the later years within the stipulated time, they were considered to be in default, and the Sales Tax Officer was entitled to initiate recovery proceedings.

3. The second contention raised by the petitioner was regarding the imposition of penal interest under section 8(1-A) of the Act. The petitioner argued that the Sales Tax Officer should impose the penal interest, not the Collector who conducted the recovery proceedings. The Court observed that the recovery certificates issued by the Sales Tax Officer already included provisions for penal interest, and the arithmetical computation of the interest amount was left to the Collector due to the uncertainty of the payment date. Therefore, the Court held that the imposition of penal interest had been correctly carried out by the Sales Tax Officer, and the contention raised by the petitioner on this issue was dismissed.

In conclusion, the High Court dismissed the petition challenging the recovery proceedings initiated by the Collector, upholding the jurisdiction of the Sales Tax Officer to recover the tax liabilities and impose penal interest as per the provisions of the U.P. Sales Tax Act.