2006 (7) TMI 589 - HC - VAT and Sales Tax

Summary

Issues:
Claim of sales tax exemption based on Industries Department order, withdrawal of sales tax incentives by the Government, applicability of interest on tax payment, interpretation of Orissa Sales Tax Act provisions, promissory estoppel doctrine, assessment of default for interest payment, relevance of appellate/revisional authority orders, necessity of notice for interest levy, impact of eligibility certificate on tax liability, waiver of interest, payment schedule for sales tax.

Analysis:
The writ petitions were filed challenging assessment orders due to a sales tax exemption granted by the Industries Department. The Government withdrew the sales tax incentives for aerated water products, leading to a dispute on interest payment. The petitioner offered to pay the due tax without interest/penalty, but the Revenue insisted on levying interest. The key issue was whether the petitioner was liable to pay interest under the Orissa Sales Tax Act.

The Orissa Sales Tax Act provides for interest payment under sections 12(4-a) and 13(6). The Revenue acknowledged that section 12(4-a) did not apply, but argued for the applicability of section 13(6) in case of default. The Act does not define "default," leaving it to the ordinary meaning of the term. The provision for interest under section 13(6) is contingent upon the final orders of the appellate/revisional authority, indicating that interest is not leviable independently.

The petitioner cited legal precedents emphasizing the necessity of a specific demand for interest and an opportunity for the assessee to show cause before levying interest. The court considered the continuing validity of the eligibility certificate for sales tax concession and concluded that no demand for interest or penalty arose as long as the certification remained valid. In light of these facts and legal principles, the court held that interest or penalty could not be charged on the petitioner.

The court directed the petitioner to pay the sales tax amount in two instalments, considering the principle of promissory estoppel and the petitioner's offer. The judgment clarified that it was specific to the case at hand and did not establish a general proposition on the relevant sections of the Orissa Sales Tax Act. All writ petitions were disposed of without costs, with both judges concurring on the decision.