1982 (12) TMI 155 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge to the entry regarding the point of levy of tax.
2. Liability to pay interest on unpaid tax due to stay orders issued by the court.
3. Interpretation of section 16 of the Andhra Pradesh General Sales Tax Act regarding the liability to pay interest.

Detailed Analysis:
1. The petitioners, who are dealers in groundnut oil, challenged the entry regarding the point of levy of tax under item 6 of the Third Schedule to the Andhra Pradesh General Sales Tax Act, 1957. The petitioners filed writ petitions questioning the effectiveness of the entry due to uncertainty in the point of levy of tax. The court initially ordered the completion of assessment but stayed the collection of tax pending further orders. The writ petitions were later dismissed, leading the petitioners to appeal to the Supreme Court. The Supreme Court eventually directed the petitioners to pay the tax due in quarterly instalments, which they complied with. Subsequently, the department demanded interest under section 16(3) of the Act, which was challenged by the petitioners in the present batch of cases.

2. The contention raised by the petitioners' counsel was that the liability to pay interest on unpaid tax did not arise as the notices of assessment did not specify a time for payment, and the tax collection was stayed by the court orders. The argument was based on the interpretation of section 16 of the Act, which provides for interest on unpaid tax. However, the court held that the liability to pay interest is automatic under the statute and arises by operation of law. Referring to previous judgments, the court emphasized that the existence of a stay order does not prevent the accrual of interest under the statute. The court rejected the argument that the absence of a specific demand for tax payment within a particular period nullified the liability to pay interest, especially when the assessing authorities were prevented from making such a demand due to the stay orders.

3. The court further analyzed the petitioners' argument that a formal demand for tax payment within a specific period was a prerequisite for the liability to pay interest. The court reasoned that the petitioners, having obtained stay orders that hindered the assessing authorities from making the demand, cannot evade the liability to pay interest. The court highlighted that the petitioners cannot claim immunity from statutory obligations based on the interlocutory orders issued during the legal proceedings. Ultimately, the court dismissed the tax revision cases, emphasizing that the petitioners cannot claim any unintended benefits or immunity from statutory obligations after failing in their petitions and appeals before the courts.

In conclusion, the court upheld the liability of the petitioners to pay interest on the unpaid tax, emphasizing that the existence of stay orders does not absolve them from fulfilling their statutory obligations.