1992 (1) TMI 325 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of section 9(2) of the Central Sales Tax Act, 1956 in relation to charging of interest and reopening of cases by the Revenue based on nullification of charges under rule 10 of the Central Sales Tax (Orissa) Rules, 1957.

Analysis:
The case involved a reference from the Orissa Sales Tax Tribunal regarding the correctness of the Tribunal's decision on the Revenue's ability to reopen a case under section 9(2) of the Central Sales Tax Act, 1956 after charges under rule 10 of the Central Sales Tax (Orissa) Rules, 1957 were annulled. The assessing officer initially charged interest under rule 10, which was later annulled in appeal. Subsequently, interest was charged again under section 9(2) of the Central Act. The Tribunal held that once the charge under rule 10 was annulled, the assessing officer could not reopen the case under section 9(2). The Revenue contended that nullification under rule 10 did not preclude resorting to section 9(2) of the Central Act.

The Court analyzed the contextual differences between rule 10 and section 9(2), emphasizing that section 9(2) deals with procedural aspects of levy, collection of tax, penalties, and interest. It noted that interest provisions were inserted by an amendment and adopted procedural provisions from the State law. The Court held that interest could be charged under section 9(2) based on the specific provisions of the Act and Rules, contrary to the Tribunal's view.

Regarding the chargeability of interest, the Court highlighted that it is not automatic and requires the assessing officer to be satisfied that the dealer knowingly provided incorrect information affecting tax liability. The Court found that the assessing officer charged interest based on tax withholding without proper adjudication. It directed the Tribunal to reconsider the case under section 24(5) to determine if interest was warranted based on the facts. The Court concluded by disposing of the reference in favor of the Revenue, emphasizing the need for proper assessment before charging interest.

In a separate judgment, Justice S.K. Mohanty concurred with the decision to answer the reference in the negative, indicating agreement with the primary judgment's analysis and conclusion.