1996 (11) TMI 436 - HC - VAT and Sales Tax

Summary

Issues:
- Interpretation of provisions under U.P. Sales Tax Act, 1948 regarding the submission of returns and payment of tax by dealers.
- Applicability of interest under section 8(1) of the Act for non-compliance with payment provisions.
- Consideration of the second proviso to rule 41 allowing quarterly returns and its impact on tax payment timelines.
- Analysis of the definition of "tax admittedly payable" under section 8(1) of the Act.
- Evaluation of the assessing officer's authority to levy interest based on default in payment under the second proviso to rule 41.
- Examination of the circular issued by the Commissioner of Sales Tax regarding interest and penalty levies for non-compliance.

Detailed Analysis:

The judgment by the Allahabad High Court pertains to two revision petitions challenging the Sales Tax Tribunal's order dismissing the dealer's appeals against the levy of interest under section 8(1) of the U.P. Sales Tax Act, 1948. The issue revolves around the dealer's non-compliance with the payment provisions and the interpretation of relevant sections and rules governing tax submission and payment timelines.

The court examined the provisions of section 7(1) and 7(1-A) of the Act, specifying the requirements for dealers to submit returns of turnover and deposit tax. Rule 41, particularly its second proviso, allows dealers to opt for quarterly returns but mandates timely tax payment in the first two months of each quarter based on the preceding year's turnover. The court emphasized the importance of adhering to these timelines for tax payment.

The definition of "tax admittedly payable" under section 8(1) was crucial in determining the correct tax liability of the dealer. The court highlighted the significance of accurately calculating and paying the tax amount based on the turnover admitted in returns or account books. Any shortfall in deposit and delay in payment could lead to interest levies under section 8(1) by the assessing officer.

The judgment addressed the contention regarding the circular issued by the Commissioner of Sales Tax, clarifying that non-contravention of rule 41(1) does not absolve dealers from interest or penalty liabilities. It underscored the need for strict adherence to payment provisions and accurate calculation of tax liabilities to avoid interest levies.

Ultimately, the court ruled in favor of the dealer, setting aside the Tribunal's order and quashing the levy of interest for the assessment years in question. The judgment emphasized the assessing officer's obligation to assess the actual tax payable based on disclosed turnovers and levy interest only on any shortfall, ensuring compliance with the statutory provisions.