2010 (1) TMI 1125 - HC - VAT and Sales Tax

Demand notice issued by the Deputy Commissioner (Assessment) II, Trade Tax, Ghaziabad demanding a sum of ₹ 2,61,912 towards interest from the petitioner for the assessment year 1986-87 challenged Held that - The present writ petition has been resorted to as a buyingtime tactic. More realistic approach relating to costs may be the need of the hour. The petitioner has obtained a conditional stay order on September 13, 2004. The order provides that on deposit of ₹ 1,75,000 within one month from the date of the order, the operation of the impugned demand contained in the letter dated September 25, 2004 through the petition shall remain stayed. It is also equally settled that if the petition is being dismissed, the petitioner should restore back the advantages which it had obtained under the interim order. It is, therefore, provided that the petitioner will be liable to pay interest by way of additional sum over and above the amount which may be payable under the U.P. Trade Tax Act at the rate of six per cent simple interest per annum on the balance amount for the period from September 13, 2004 (the day on which the stay order was obtained) to the date of actual payment. W.P. dismissed.

Summary

Issues:
Challenge to demand notice for interest payment for assessment year 1986-87 (provincial).

Analysis:
The petitioner, a private limited company, challenged a demand notice for interest issued by the Deputy Commissioner (Assessment) II, Trade Tax, Ghaziabad, amounting to Rs. 2,61,912 for the assessment year 1986-87 (provincial). The additional tax liability was created by the assessing officer, leading to appeals and ultimately a writ petition. The petitioner disputed liability to pay interest, citing prior tax deposits and certain legal decisions. The respondents contended that interest payment was a statutory liability and the petitioner should have raised the issue in previous proceedings. The court noted that the petitioner failed to challenge interest payment in earlier stages, rendering the present petition an abuse of process. The court also highlighted that the petitioner did not provide necessary pleadings or material to support its case, leading to a lack of substance in the argument. The court emphasized that a writ petition against a notice of demand is not maintainable if the underlying order cannot be challenged.

The court further discussed the applicability of a Government Order (G.O.) dated March 22, 2003, regarding waiver of interest. The G.O. applied to outstanding tax liabilities as of March 31, 2002, which did not include the petitioner's case. The court found that the petitioner was not in tax arrears when the G.O. came into effect, thus justifying the respondents' decision not to apply the waiver to the petitioner. The court dismissed the writ petition with a condition for the petitioner to pay additional interest if the stay order benefits were to be retained. The judgment emphasized the importance of a realistic approach to costs and the need to comply with court orders to avoid adverse consequences.

In conclusion, the court upheld the demand notice for interest payment for the assessment year 1986-87 (provincial), highlighting the petitioner's failure to raise the issue in previous proceedings and the inapplicability of the G.O. on waiver of interest to the petitioner's case. The dismissal of the writ petition underscored the importance of complying with court orders and the consequences of using legal tactics to delay payment obligations.