2002 (11) TMI 749 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Imposition of interest for belated payment of tax on works contract turnover.
2. Validity of the assessment and imposition of interest under Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act).
3. Impact of court orders and retrospective legislation on tax liability and interest.

Summary:

Issue 1: Imposition of Interest for Belated Payment of Tax on Works Contract Turnover

The petitioners challenged the imposition of interest for the belated payment of tax on the turnover of works contracts, arguing that they had filed revised returns and paid the tax due before the final assessment order was passed. They contended that since the tax amounts were paid prior to the final assessment order, they should not be liable to pay interest as demanded by the assessing officer.

Issue 2: Validity of the Assessment and Imposition of Interest u/s 24(3) of the TNGST Act

The petitioners, who were Rule 18 assessees, filed monthly returns disclosing the turnover of works contracts but did not pay the tax due, citing a stay order from the court. The assessing officer demanded interest for the period of default under Section 24(3) of the Act. The petitioners argued that interest could only be imposed on amounts remaining unpaid after the due date specified for its payment and that the tax was quantified only on final assessment. They contended that since they had paid the tax before the final assessment, the imposition of interest was unwarranted.

Issue 3: Impact of Court Orders and Retrospective Legislation on Tax Liability and Interest

The court upheld the validity of Section 3-B but struck down Rules 6A and 6B. The deficiencies were cured by Act 25 of 1993, which retrospectively introduced Section 3B with effect from June 26, 1986. The court held that the petitioners were liable to pay tax from June 26, 1986, onwards and, in default, were liable to pay interest. The court also noted that the filing of writ petitions and interim orders granted by the court did not absolve the petitioners from paying the amount legally due to the government in time.

Conclusion:

The court dismissed all the writ petitions, holding that the imposition of interest from the date the tax became payable was in accordance with the law. The court emphasized that the liability to pay interest under Section 24(3) of the TNGST Act was automatic and absolute from the date on which the tax amount became due under Section 13(2) read with Rule 18 of the Rules.