2011 (3) TMI 1502 - HC - VAT and Sales Tax

Whether under the provisions contained in section 7A of the Act, interest was payable at the rate of two per cent per month or per year? Held that - The respondent No. 1 in the impugned order dated May 9, 1995 has computed the interest at the rate of two per cent per month on the amount of tax remaining unpaid, which is in consonance with the provisions of section 7A of the Act. In the circumstances, no infirmity can be found in the impugned order passed by respondent No. 1 as well as in the impugned order passed by respondent No. 2 confirming the order passed by respondent No. 1. Appeal dismissed.

Summary

Issues: Interpretation of section 7A of the Gujarat Tax on Luxuries (Hotels and Lodging Houses) Act, 1977.

In this case, a private limited company running a residential hotel challenged orders related to the payment of luxury tax under the Act for a specific period. The issue revolved around the calculation of interest at two percent per month under section 7A of the Act. The petitioner argued that the provision did not specify whether the interest was payable monthly or annually. The petitioner contended that in the absence of such qualification, the interest should be considered per annum. On the other hand, the respondents interpreted the provision to mean that interest is leviable at the rate of two percent per month. The court analyzed the language of section 7A and the Statement of Objects and Reasons behind its introduction, which clarified the legislative intent to charge interest at two percent per month. The court held that the provision mandated simple interest at two percent for each month or part thereof for the period the tax remains unpaid. The court emphasized that interpreting the statute should ensure that no part of it is rendered meaningless. The court concluded that the orders calculating interest at two percent per month were in line with the Act and dismissed the petition, upholding the impugned orders.

Therefore, the main issue involved in this judgment was the interpretation of section 7A of the Act regarding the calculation of interest on delayed payment of luxury tax. The court's detailed analysis focused on the language of the provision, the legislative intent as reflected in the Statement of Objects and Reasons, and the principles of statutory interpretation to resolve the dispute between the petitioner and the respondents.