1977 (11) TMI 134 - HC - VAT and Sales Tax

Issues Involved:
1. Legality of interest demanded on provisional assessments made beyond the assessment year.
2. Legality of interest demanded on provisional assessments within the assessment year but collected after the close of the year.
3. Liability to pay interest during the period when stay orders were obtained from the High Court.
4. Requirement of issuing show cause notices before levying interest on the assessed tax.

Issue-Wise Detailed Analysis:

1. Legality of Interest on Provisional Assessments Made Beyond the Assessment Year:
The petitioners argued that provisional assessments made beyond the assessment year are unauthorized by law, and interest demanded in such cases is invalid. The court examined Section 15 of the Andhra Pradesh General Sales Tax Act, which allows for provisional assessment of tax "during the year." The court interpreted "during the year" not as "within the year" but as referring to the tax for that specific year. It concluded that there is no legal prohibition against making provisional assessments after the year-end based on the returns submitted. The court emphasized that the assessing authority has the discretion to make provisional assessments even after the 31st of March, and the language of Section 15 does not mandate completion within the year.

2. Legality of Interest on Provisional Assessments Within the Year but Collected After Year-End:
The court found no distinction between provisional assessments made within the year and those made beyond the year for the purpose of collecting interest under Section 16(3) of the Act. The statute allows for the collection of interest on unpaid tax, and this provision applies uniformly regardless of when the provisional assessment is made, as long as it pertains to the tax for that year.

3. Liability to Pay Interest During the Period of Stay Orders:
The petitioners contended that they should not be liable to pay interest for the period during which they had obtained stay orders from the High Court. The court referred to the Supreme Court's decision in Haji Lal Mohd. Biri Works v. State of U.P., which held that liability to pay interest is automatic and arises by operation of law, even during the period of stay. The court found no significant difference in the language of Section 16(3) of the Andhra Pradesh Act and Section 8(1-A) of the U.P. Act, thus concluding that the petitioners are liable to pay interest despite the stay orders.

4. Requirement of Issuing Show Cause Notices Before Levying Interest:
The petitioners argued that the principles of natural justice required the Commercial Tax Officer to issue show cause notices before levying interest. The court rejected this argument, stating that the statutory provisions are clear and that the liability to pay interest arises automatically by operation of law upon default of payment within the prescribed time. The court distinguished the payment of interest from the levy of penalties, noting that interest is a statutory obligation and does not necessitate a show cause notice.

Conclusion:
The court confirmed the order of the Sales Tax Appellate Tribunal and dismissed the revisions, holding that:
- Provisional assessments made beyond the assessment year are valid, and interest can be demanded on such assessments.
- Interest can be collected on provisional assessments made within the year but collected after the year-end.
- Liability to pay interest persists even during the period of stay orders obtained from the High Court.
- There is no requirement to issue show cause notices before levying interest on the assessed tax.

The court also denied the oral application for leave to appeal to the Supreme Court, as no substantial question of law of general importance was found to arise in these cases. Petitions were dismissed with no costs, and an advocate's fee of Rs. 200 was set for each case.

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