1993 (1) TMI 283 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of section 11-D(2) of the Punjab General Sales Tax Act, 1948 regarding the charging of interest on delayed payments of tax assessed.

Detailed Analysis:
The judgment of the High Court of Punjab and Haryana dealt with two General Sales Tax References concerning the assessment years 1974-75 and 1975-76 for a registered dealer, Messrs. Rajasthan Wool Industries. The Assessing Authority had imposed tax, penalty, and interest on the dealer, which led to appeals and subsequent dismissals by the appellate authorities. The main question referred to the Court was whether section 11-D(2) of the Act applied to assessments or demands created after its induction into the Act for years prior to the amendment.

The petitioner contended that section 11-D is a charging section imposing tax liability and should be applied prospectively, citing precedents from the Income-tax Act cases. However, the Court distinguished those cases, emphasizing that the claim for interest on delayed tax payment is procedural and compensatory, not a tax itself. Referring to a similar matter under the U.P. Sales Tax Act, the Court highlighted that interest starts automatically running on arrears from the date specified, irrespective of the assessment years.

The Court noted that the provision in section 11-D of the Act mirrors the U.P. Sales Tax Act amendment, which clarifies the applicability of interest on delayed tax payments. Consequently, the Court answered the referred question in the affirmative, stating that section 11-D(2) of the Punjab General Sales Tax Act covers assessments or demands created after the provision's induction into the Act for years preceding the amendment.

In conclusion, the Court resolved the reference in the affirmative, affirming that section 11-D(2) of the Punjab General Sales Tax Act applies to assessments or demands made after the provision's inclusion in the Act, even for years prior to the amendment.