2010 (10) TMI 952 - HC - VAT and Sales Tax

Whether the Commissioner of Commercial Taxes was justified in holding that the appellant is liable to pay interest on belated payment of Central sales tax for the assessment year 2000-01? Held that - Payment of tax at concessional rate at four per cent along with monthly returns is on the specific premise that the appellant will produce C forms later or will pay differential tax with interest. The stand taken by the appellant is that since there is time to produce C forms, such time available for production of C forms will be available for payment of balance tax with out interest. Irrespective of circumstances that led to delay in payment of tax, interest is payable at the rate prescribed in the statute. We notice that by virtue of section 9(2B), section 23(3A) of the KGST Act is made applicable for the purpose of levy and collection of interest for belated payment of Central sales tax. Thus we uphold the order of the Commissioner and dismiss the sales tax appeal

Summary

Issues:
1. Liability to pay interest on belated payment of Central sales tax for the assessment year 2000-01.

Analysis:
The judgment of the court addressed the issue of whether the appellant was justified in being held liable to pay interest on belated payment of Central sales tax for the assessment year 2000-01. The appellant had made interState sales declaring turnover at a concessional rate on the condition of producing C forms, which were never produced, leading to assessment at the full rate as per section 8(2)(b) of the Central Sales Tax Act, 1956. The dispute centered around the interest demanded for the belated payment of the balance demand of Central sales tax. The assessing officer levied interest under section 9(2B) of the CST Act for the period during which the tax remained unpaid. The Deputy Commissioner initially allowed the revision, but the Commissioner later vacated the order and restored the levy of interest, leading to the appeal against the Commissioner's decision.

The appellant contended that since the CST Rules allowed for the filing of C forms later, the Division Bench decision relied upon by the Commissioner was not applicable. However, the court noted that prior to the introduction of section 9(2B) by the Finance Act, 2000, sub-section (2A) was introduced to section 9 of the CST Act, making the provisions of the local Sales Tax Act applicable to the CST Act concerning the levy of interest and penalties. The court highlighted that judgments relied upon by the appellant had been superseded by statutory amendments and subsequent court decisions, particularly a Full Bench judgment that overruled the Division Bench judgment relied upon by the Deputy Commissioner.

The court emphasized that the appellant was not entitled to the concessional rate claimed in the monthly returns due to the non-production of C forms. The court noted that payment of tax at a concessional rate was on the premise that the appellant would produce C forms later or pay the differential tax with interest. The appellant's argument that the time available for producing C forms would be available for payment of the balance tax without interest was rejected by the court. The court held that irrespective of the circumstances leading to the delay in payment of tax, interest was payable as per the statute. The court upheld the Commissioner's order based on the application of section 9(2B) and section 23(3A) of the KGST Act, dismissing the sales tax appeal.

In conclusion, the court's decision was based on the interpretation of relevant statutory provisions, court precedents, and the specific facts of the case regarding the belated payment of Central sales tax. The judgment clarified the liability of the appellant to pay interest and upheld the Commissioner's decision to restore the levy of interest for the belated payment of tax.