1992 (7) TMI 317 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Claim for refund and adjustment against subsequent year's tax.
2. Validity and interpretation of Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959.
3. Applicability of Rule 18 of the Tamil Nadu General Sales Tax Rules.

Summary:

1. Claim for Refund and Adjustment Against Subsequent Year's Tax:
The appellant claimed a refund of Rs. 5,84,141 for the assessment year 1988-89, asserting it should be adjusted against the monthly sales tax payable for the same year. The first respondent rejected this claim, stating the refund related to the year 1987-88 and demanded the amount along with an additional penalty of Rs. 95,410 u/s 24(3) of the Act. The appellant's writ petition challenging this demand was dismissed by the learned single Judge, who held that the claim for refund was separate from the penalty issue.

2. Validity and Interpretation of Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959:
Section 24(3) was amended to impose interest at 2% per month on unpaid tax amounts after the specified date, making the liability automatic and absolute. The Division Bench in Sakthi Sugars Ltd. v. Assistant Commissioner of Commercial Taxes [1985] 59 STC 52 (Mad.) held that the provision is compensatory, not penal, and does not require a notice or hearing for the imposition of interest. The court reiterated that the liability under Section 24(3) is absolute, and no discretion is left to the authority to relieve the defaulting dealer of this liability.

3. Applicability of Rule 18 of the Tamil Nadu General Sales Tax Rules:
Rule 18 allows dealers to submit monthly returns and pay tax based on actual turnover. Sub-rule (3) states that if a return is submitted without proof of payment, the tax becomes due without any notice of demand. Sub-rule (4) applies only if the return is not filed on time or is incorrect/incomplete. The court held that sub-rule (4) does not cover cases where the return is complete but lacks proof of payment. In such cases, sub-rule (3) applies, and the department can recover the tax and interest u/s 24(3) without any notice.

Conclusion:
The court concluded that the appellant's claim for refund is independent of its liability to pay interest u/s 24(3). The appellant cannot claim any adjustment against the tax payable. The writ appeal was dismissed, affirming the Revenue's stance, with no order as to costs.