2010 (3) TMI 1014 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of interest levied under section 25(5) of the Haryana General Sales Tax Act, 1973.

Analysis:
The judgment delivered by the High Court of Punjab and Haryana pertained to the interpretation of interest levied under section 25(5) of the Haryana General Sales Tax Act, 1973. The case involved an assessee who purchased sunbaked bricks from registered dealers, paid sales tax at the first stage of sale, burnt the bricks in a kiln, and sold them without charging sales tax to subsequent purchasers. The Assessing Authority disallowed the claim for deduction under section 18 of the Act, leading to the creation of an additional demand against the assessee, along with the imposition of tax, interest, and penalty under sections 25(5) and 47 of the Act.

The assessee contended that no interest was payable on the additional demand created by the Department and sought a reference to the High Court on the legal question. The Tribunal initially rejected the request, but upon challenge in Sales Tax Case No. 21 of 1988, the High Court directed the Tribunal to frame the question of law and refer the matter again. The counsel for the petitioner relied on precedents like J.K. Synthetics Ltd. v. Commercial Taxes Officer and Frick India Limited v. State of Haryana, where the Supreme Court clarified that interest is due only on the amount of tax payable based on the return filed by the dealer, and there is no obligation for the dealer to predict the final assessment at the time of filing the return.

The High Court, in line with the precedents cited, held that the assessee was not liable to pay interest on the additional demand created by the Department. The judgment favored the assessee and ruled against the Revenue. Consequently, the eight references related to the case were disposed of based on this decision.