2002 (4) TMI 928 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Liability of the respondent-assessee to pay interest on the amount of tax due as a result of reassessment proceedings.
2. Interpretation of Section 11-B of the Rajasthan Sales Tax Act, 1954.
3. Application of legal precedents and statutory provisions to the facts of the case.

Issue-wise Detailed Analysis:

1. Liability of the respondent-assessee to pay interest on the amount of tax due as a result of reassessment proceedings:
The core issue revolves around whether the respondent-assessee is liable to pay interest on the tax amount found due upon reassessment. Initially, the assessee had paid tax at a concessional rate of 5% on furniture sold to the defense department, which was later reassessed at a higher rate due to an audit objection. The reassessment resulted in additional tax demands for the years 1988-89, 1989-90, and 1990-91, along with interest for delayed payment. The Rajasthan Tax Board ruled that since the short payment was not due to any negligence or fault of the assessee, interest could not be levied for the period prior to reassessment. However, this decision was challenged by the revenue department.

2. Interpretation of Section 11-B of the Rajasthan Sales Tax Act, 1954:
Section 11-B deals with the interest on failure to pay tax, fee, or penalty. The revenue argued that the dealer is liable to pay interest from the date the tax was originally payable as per the returns, even if the tax was reassessed later. The legal fiction under Section 11-B(1)(f) deems the additional tax payable from the date it was originally due. The respondent-assessee contended that interest should only be charged from the date of reassessment or rectification, as the additional tax arose from these proceedings. The court examined various sub-sections of Section 11-B and related provisions, including Section 7, which mandates that tax according to the return must be paid before filing the return.

3. Application of legal precedents and statutory provisions to the facts of the case:
Several precedents were cited, including Supreme Court decisions in Haji Lal Mohd. Biri Works v. State of U.P., Calcutta Jute Manufacturing Co. v. Commercial Tax Officer, and J.K. Synthetics Ltd. v. Commercial Taxes Officer. These cases provided insights into the interpretation of "tax payable" and the conditions under which interest is levied. The court noted that the amended Section 11-B, effective from April 7, 1979, expanded the scope of interest liability to include tax determined upon assessment. The court emphasized that legal fictions must be carried to their logical conclusion to effectuate their purpose. The court concluded that the respondent-assessee is liable to pay interest on the additional tax from the date it was deemed payable, not just from the date of reassessment.

Conclusion:
The court allowed the revisions, holding that the respondent-dealer is liable to pay interest on the quantified amount of tax from the date it was originally due but unpaid, as per the legal fiction under Section 11-B(1)(f). The assessing officer's order was restored, and no costs were awarded. The petitions were allowed.