1997 (11) TMI 505 - AT - VAT and Sales Tax

Summary

Issues:
1. Whether tax can be levied on the applicant on the sales of REP licences despite the return being filed before the Supreme Court judgment?
2. Whether interest on the tax payable for sales of REP licences can be demanded from the applicant?

Analysis:
1. The applicant challenged the assessment of tax on sales of REP licences, arguing that the Supreme Court judgment should apply prospectively. However, the Tribunal held that the judgment clarified existing law and applied retrospectively. The legal position clarified by the Supreme Court regarding REP licences being "goods" was effective from the date the relevant statute came into force. Therefore, the tax assessment on the sales of REP licences was deemed valid for the period in question, as the assessment was not barred by limitation at the time it was made.

2. The applicant contended that interest on the tax arrears for sales of REP licences should not be demanded as there was no deliberate withholding of tax due to lack of awareness about the tax liability. The Tribunal cited a Supreme Court decision, stating that once the law regarding the tax liability on such sales was settled, the payment of sales tax became obligatory. The Tribunal distinguished between the period before and after the Supreme Court judgment, holding that interest on the tax arrears would only accrue from the date of the judgment. The applicant was deemed liable to pay interest on the sales proceeds of REP licences from the date of the Supreme Court judgment.

In conclusion, the Tribunal upheld the validity of the tax assessment on the sales of REP licences for the specified period and declared the applicant liable to pay interest on the tax arrears only from the date of the Supreme Court judgment. The assessment order was to be modified accordingly, and no costs were awarded.