2001 (7) TMI 1265 - HC - VAT and Sales Tax

Summary

Issues:
- Liability to pay interest despite depositing tax in accordance with the return.

Analysis:
The judgment delivered by the Punjab and Haryana High Court pertains to three assessment years, focusing on the issue of whether the petitioner-assessee was liable to pay interest despite depositing tax in accordance with the return. The petitioner, engaged in the manufacture of iron and steel rounds, collected sales tax on the end-product and deducted the tax paid on raw materials while filing returns. However, the competent authority added the deducted tax amount to the taxable turnover, holding the assessee liable for interest payment. The Tribunal initially relied on a previous Supreme Court decision but was later found incorrect based on a subsequent Supreme Court ruling in J.K. Synthetics Ltd. v. Commercial Taxes Officer [1994] 94 STC 422, which clarified that interest is not leviable if tax is paid as per the return.

The Court highlighted that despite the provision requiring the Tribunal to state the case and make a reference under section 42, given the authoritative Supreme Court decision and absence of factual disputes, such a reference was deemed unnecessary, avoiding wastage of time and resources. Drawing parallels with similar cases and principles of "updating construction," the Court decided to answer the issue directly in favor of the assessee, concluding that the Tribunal was not justified in upholding the interest levy, thus entitling the assessee to a refund.

In conclusion, the Court answered the posed question in favor of the assessee for all three cases, emphasizing that no costs were to be awarded. The judgment ultimately favored the assessee, resolving the issue of interest payment despite tax deposit in line with the return, based on the settled law and factual admissions.