2009 (1) TMI 827 - HC - VAT and Sales Tax

Whether, in the facts and circumstances of the case, the petitioner was liable to pay interest from the date of filing of return or from the date of revising the assessment when the tax had become actually due? Held that - The matter is no longer res integra. A similar question of law has already been answered by a Division Bench of this court in favour of the assessee and against the Revenue in the case of Chaudhary Tractor Company v. State of Haryana 2006 (5) TMI 455 - PUNJAB AND HARYANA HIGH COURT holding that the assessee is not liable to pay interest for the period before the demand was raised against him. Question of law raised in the instant case is decided in favour of the applicant and against the Revenue.

Summary

Issues:
1. Liability to pay interest from the date of filing of return or from the date of revising the assessment when the tax had become actually due.

Analysis:
The judgment pertains to a case where the Sales Tax Tribunal referred a question of law to the High Court regarding the liability of the petitioner to pay interest. The case involved an assessment year 1982-83 where the dealer, a registered dealer under sales tax laws, faced assessment proceedings due to alleged wilful adjournments and failure to produce account books. An addition of Rs. 2,00,000 was made to the declared turnover, resulting in an additional demand and penalty. The case was remanded by the Appellate Authority for fresh proceedings, leading to a refund due to lack of connection between impounded documents and the dealer's business.

Subsequently, the revisional authority initiated proceedings to revise the assessment order, resulting in an additional demand including tax, penalties, and interest. The Tribunal reduced the addition made by the revisional authority and the penalty but upheld the charging of interest. The applicant challenged this decision through a reference application, which was declined, leading to the filing of a case in the High Court.

The High Court, after considering precedents and judgments, including a Division Bench ruling and Supreme Court decisions, concluded that the petitioner is not liable to pay interest for the period before the demand was raised. Citing various legal cases, the Court held that interest cannot be levied for any period prior to the actual demand made for payment under the provisions of the Act. The judgment favored the applicant and ruled against the Revenue, aligning with established legal principles and prior court decisions.

In summary, the High Court's decision in this case clarifies the liability of the petitioner to pay interest, emphasizing that interest cannot be charged for periods preceding the actual demand for payment. The judgment reinforces legal precedents and aligns with established principles regarding the imposition of interest in taxation matters, providing clarity on the issue raised by the Sales Tax Tribunal.