1997 (9) TMI 587 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the interest demand for forty-three months.
2. Calculation of interest from the date of the appellate order.
3. Effect of the stay order on the interest liability.
4. Applicability of cited case laws and statutory provisions.

Issue-wise Detailed Analysis:

1. Validity of the Interest Demand for Forty-three Months:
The applicant, a registered dealer under both the Bengal Finance (Sales Tax) Act, 1941 and the West Bengal Sales Tax Act, 1954, challenged the interest demand for forty-three months. The Tribunal examined the provisions of section 10A(4) of the 1941 Act and section 8A(4) of the 1954 Act, which state that interest payable should be determined or re-determined on the basis of the modified amount of tax resulting from an appellate or revisional order. The Tribunal concluded that these provisions do not exclusively refer to a reduction in the tax amount but to any modification, including enhancement or annulment of the assessment.

2. Calculation of Interest from the Date of the Appellate Order:
The applicant argued that interest should be calculated from the date of the appellate order, citing the Supreme Court's observation in Hasmat Rai v. Raghunath Prasad and Income-tax Officer, Kolar Circle v. Seghu Buchiah Setty. The Tribunal rejected this argument, stating that the specific provisions of the 1941 and 1954 Acts override the general principles outlined in the cited cases. The Tribunal emphasized that interest must be calculated from the date specified in the original notice of demand, as per section 10A(3) of the 1941 Act and section 8A(3) of the 1954 Act.

3. Effect of the Stay Order on the Interest Liability:
The applicant contended that the stay order, which was granted on the condition of depositing a certain amount, should exempt them from paying interest during the stay period. The Tribunal disagreed, stating that the stay order does not extinguish the demand but merely suspends its collection. The Tribunal referred to the case of Hindusthan Heavy Chemicals Limited v. Commercial Tax Officer, where it was held that interest continues to accrue unless the assessment is entirely set aside.

4. Applicability of Cited Case Laws and Statutory Provisions:
The applicant relied on various case laws, including Firm Parshuram Rameshwar Lal v. State of Uttar Pradesh and M.L. Shroff & Co. v. Commissioner of Commercial Taxes, to support their arguments. The Tribunal distinguished these cases based on differences in statutory provisions and factual circumstances. Specifically, the Tribunal noted that the U.P. Sales Tax Act and the Indian Income-tax Act, 1922, have different schemes and provisions compared to the 1941 and 1954 Acts. The Tribunal also clarified that the decision in M.L. Shroff & Co. was based on unique facts that do not apply to the present cases.

Conclusion:
The Tribunal concluded that the interest demand for forty-three months is valid and must be calculated from the date specified in the original notice of demand. The stay order does not exempt the applicant from paying interest during the stay period. The appeal was dismissed with no order as to cost.