2007 (5) TMI 584 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the Trade Tax Tribunal is legally justified in quashing the demand of interest under section 8(1) of the U.P. Trade Tax Act for the tax legally payable on the turnover admitted by the dealer.
2. Whether the Tribunal's judgment is correct in light of the Supreme Court decision in Commissioner of Sales Tax, U.P. v. Qureshi Crucible Center.

Issue-Wise Detailed Analysis:

1. Quashing the Demand of Interest under Section 8(1):

The dealer was engaged in the manufacture and sale of electronic goods and claimed tax exemptions and concessional rates based on form IIIB submissions. The assessing authority disallowed these exemptions due to the non-furnishing of form IIIB and levied tax at the normal rate, subsequently demanding interest under section 8(1) of the Act. The Tribunal upheld the tax levy but deleted the interest, leading to the present revisions.

The Revenue argued that the dealer's failure to furnish form IIIB necessitated the tax at the normal rate, making it "tax admittedly payable" under section 8(1), and thus interest was due from the return filing date. They cited precedents, including Commissioner of Trade Tax, U.P., Lucknow v. Jobex India and Commissioner of Trade Tax, U.P., Lucknow v. Deepak Hume Pipe Manufacturing Company, and the Supreme Court's decision in Commissioner of Sales Tax, U.P. v. Qureshi Crucible Center, to support their stance.

Conversely, the dealer contended that the statute allowed furnishing forms up to the assessment stage, invoking "legitimate expectation and hope to get the form." They argued that tax assessed in the assessment order should not be treated as "tax admittedly payable" if forms were not furnished by the return filing date but were expected to be obtained later. They supported their claim with decisions like J.K. Synthetics Ltd. v. Commercial Taxes Officer and Commissioner of Sales Tax v. Hindustan Aluminium Corporation.

The court examined relevant statutory provisions, including sections 7 and 8 of the Act, and rules 25B and 41 of the U.P. Trade Tax Rules, 1948. It also reviewed various judicial decisions addressing the issue of interest on unpaid tax due to non-furnishing of requisite forms.

2. Tribunal's Judgment in Light of Supreme Court Decision:

The Supreme Court in Commissioner of Sales Tax, U.P. v. Qureshi Crucible Center held that section 8(1) of the Act mandates interest on unpaid tax from the due date, irrespective of the dealer's intent or bona fide belief. The court emphasized that "tax admittedly payable" includes tax on turnover disclosed in returns or accounts maintained by the dealer.

The court noted divergent views on the issue of interest for non-furnishing of forms, necessitating a Full Bench consideration. It framed specific questions for the Full Bench:
(a) Whether interest under section 8(1) can be demanded from the due date of the return or from the date of the assessment order in case of non-furnishing of forms.
(b) Whether tax assessed at a normal rate due to non-furnishing of forms can be considered "tax admittedly payable" under section 8(1).
(c) The role of legitimate expectation or bona fide belief under section 8(1) and the stage of tax liability determination (return or assessment).

The court directed that the file be placed before the Chief Justice for the constitution of a Full Bench to resolve these questions comprehensively.

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