2010 (5) TMI 768 - HC - VAT and Sales Tax

Summary

Issues: Liability for payment of interest prior to the date of assessment

Analysis:
The judgment delivered by the High Court of Punjab and Haryana dealt with the issue of whether an assessee is liable for payment of interest for the period prior to the date of assessment. The appellant-assessee, a registered dealer under the Punjab General Sales Tax Act, 1948, filed returns of sales claiming it to be branch transfers for the assessment year 2001-02. The Assessing Authority framed an assessment, accepting the returns but levying purchase tax, penalty under section 10(6), and interest under section 11D(1) of the Act. The Tribunal held that no penalty was leviable as tax was paid as per returns, but upheld the payment of interest.

The counsel for the assessee relied on a previous judgment, "Lakhi Ram Diwan Singh v. State of Haryana," and argued that the case is similar and interest should not be payable prior to the date of assessment. The counsel cited precedents such as J.K. Synthetics Ltd. v. Commercial Taxes Officer and Frick India Limited v. State of Haryana to support the argument. It was contended that section 11D of the Act is akin to section 25(5) of the Haryana General Sales Tax Act, 1973, as discussed in the Lakhi Ram Diwan Singh case.

On the other hand, the State counsel argued that since the tax had not been paid by the assessee, interest under section 11D of the Act is applicable. However, the court, after considering the arguments, held that the present case aligns with the Lakhi Ram Diwan Singh case, where it was established that interest is payable from the date of assessment and not prior thereto. Consequently, the court ruled in favor of the assessee, setting aside the Tribunal's order and accepting the appeals.

In conclusion, the judgment clarified the liability of the assessee for payment of interest under section 11D of the Act, emphasizing that interest is payable from the date of assessment and not prior to it based on the interpretation of relevant legal provisions and precedents.