1971 (2) TMI 98 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of interest demand without fresh notice of demand after appellate order.
2. Interpretation of provisions of section 8 of the Sales Tax Act regarding recovery of tax and interest.

Analysis:
The petitioner, a sales tax assessee, challenged a demand for interest issued by the Sales Tax Officer without a fresh notice of demand after the appellate order. The petitioner argued that since the recovery of tax was stayed pending appeals and no fresh notice of demand was issued, there was no default in payment of tax. The court rejected the argument regarding the stay order, emphasizing the need for the actual terms of the stay order. The petitioner further contended that interest being a tax, required a notice of demand similar to tax. However, the court cited a previous ruling rejecting this argument, stating that interest is a part of tax under the Sales Tax Act.

Another argument raised was regarding the merger of the assessment order of the Sales Tax Officer with the appellate authority's order, necessitating a fresh notice of demand after the appellate order. The court analyzed Section 8 of the Sales Tax Act, particularly sub-sections (1) and (1-A), which deal with the recovery of tax and interest. The court highlighted the significance of the provisos under sub-section (1-A), emphasizing that interest should be recalculated, not calculated, in case of variations in tax amount due to appeals or court orders.

The court discussed the principle of merger of orders and its application to the Sales Tax Act, emphasizing that the language of the Act determines the extent of operation. The court also referenced various legal precedents to interpret the provisos under Section 8, emphasizing the need for harmonious construction with the main enactment. The court distinguished cases under the Income Tax Act from the present Sales Tax Act case, highlighting the differences in language and provisions.

The judgment also addressed the impact of a recent amendment to the Sales Tax Act, which introduced a new sub-section (9) to Section 8. This amendment clarified the procedures for serving fresh notices of demand in case of tax variations due to appeals. The court noted that the amendment overruled previous decisions, including one cited by the petitioner, and upheld the legislative intent regarding the recovery of tax and interest.

In conclusion, the court dismissed the petition, citing the legislative amendment and the impact on the petitioner's arguments. The court also mentioned that no costs were awarded due to the timing of the petition filed after a specific court decision.