1993 (11) TMI 214 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Incorrect reporting of turnover and subsequent tax payment.
2. Levy of interest under Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959.
3. Application of Rule 18(3) and Rule 18(4) of the Tamil Nadu General Sales Tax Rules, 1959.
4. Validity of the demand for interest by the tax authorities.

Issue-wise Detailed Analysis:

1. Incorrect Reporting of Turnover and Subsequent Tax Payment:
The petitioner, Godrej & Boyce Manufacturing Co. Ltd., inadvertently reported the turnover for October 1991 instead of December 1991 in their monthly return for December 1991. This mistake was realized in January 1992, and a revised return was filed on February 19, 1992, with the correct turnover and the difference in tax amounting to Rs. 20,15,601.

2. Levy of Interest Under Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959:
The tax authorities issued a notice levying interest of Rs. 40,312 under Section 24(3) of the Act, calculated at 2% per month on the tax due. The petitioner contended that there was no non-payment of tax at the time of filing the original or revised returns, and thus, the department lacked the authority to charge interest under Section 24(3).

3. Application of Rule 18(3) and Rule 18(4) of the Tamil Nadu General Sales Tax Rules, 1959:
The petitioner argued that Rule 18(3) of the Rules, read with Sections 13(2) and 24(3) of the Act, indicated that tax becomes due on the date of receipt of the return or the last due date, whichever is later. They contended that since there was no unpaid tax at the time of filing the returns, the levy of interest was not justified. They also cited a Division Bench decision in Sakthi Sugars Ltd. v. Assistant Commissioner of Commercial Taxes [1985] 59 STC 52, which held that provisional assessments under Rule 18(3) were not covered by Section 24(3).

4. Validity of the Demand for Interest by the Tax Authorities:
The Government Advocate countered that the decision in Sakthi Sugars Ltd. was no longer applicable due to subsequent amendments to Section 24. The amended Section 24(3) imposed an automatic liability to pay interest on any unpaid amount after the specified date, without requiring an assessment order. This view was supported by a later Division Bench decision in Apollo Tubes Limited v. Additional Deputy Commercial Tax Officer [1994] 93 STC 339 (Mad.), which clarified that the amended Section 24(3) applied to amounts remaining unpaid, regardless of whether an assessment order was issued.

Judgment:
The court found that the petitioner had admitted to the mistake and the delay in paying the tax due for December 1991. The tax liability accrued on January 20, 1992, and the payment was made on February 19, 1992, resulting in a 30-day delay. The court held that the petitioner was liable to pay interest at 2% per month for the delay under Section 24(3) of the Act. The court dismissed the writ petition, emphasizing that the petitioner's voluntary disclosure of the mistake did not exempt them from the interest liability. The court also noted that Rule 18(4) did not apply as the mistake was not detected by the tax authorities but was voluntarily disclosed by the petitioner.

Conclusion:
The writ petition was dismissed, and the petitioner was held liable to pay the interest as demanded by the tax authorities. The court upheld the applicability of the amended Section 24(3) and rejected the petitioner's contention that Rule 18(4) should apply. The decision reinforced the automatic liability to pay interest on unpaid tax amounts under the amended provisions of the Act.