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2003 (4) TMI 555 - HC - VAT and Sales Tax
Issues:
1. Assessment of interest under section 8(1) for late deposit of tax. 2. Validity of payment by cheque and its encashment. Analysis: 1. Assessment of interest under section 8(1) for late deposit of tax: The Tribunal had held that interest charged by the assessing authority was not justified as the dealer had deposited the amount by pay order on July 30, 1982, after the cheque was dishonored due to an income-tax raid. The Tribunal found no mala fide on the dealer's part and considered the payment on June 29, 1982, as a valid discharge of the amount due, given the credit balance in the bank account. However, the High Court disagreed, citing a Supreme Court case where it was stated that a cheque is a conditional payment subject to encashment. Since the cheque was dishonored, the admitted tax could not be considered deposited in time. The Court emphasized that the validity of a cheque is for six months, and the dealer should have been vigilant about its encashment. 2. Validity of payment by cheque and its encashment: The Court distinguished a Division Bench judgment where interest was not charged due to delays caused by the department's failure to realize the cheque proceeds in time. In the present case, the Court noted that the cheque was presented within a reasonable time, and there was no lapse on the part of the Sales Tax Department. The Court clarified that for the charge of interest under section 8(1), there is no scope for considering reasonable cause or mala fide. The provision mandates the deposit of tax within the prescribed time, failing which simple interest becomes due. Therefore, the Court held that the Tribunal's order was legally incorrect, setting it aside and ruling that the dealer was liable for interest under section 8(1) for the delayed payment of admitted tax. In conclusion, the High Court allowed the revisions, setting aside the Tribunal's order and holding the dealer accountable for interest under section 8(1) for the delayed payment of tax.
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