2013 (2) TMI 641 - HC - VAT and Sales Tax

Summary

Issues involved:
The judgment involves the question of whether the Tribunal was justified in upholding the levy of interest on an amount without excluding the excess tax credit in the company's account.

Tax Benefit and Deferment:
The appellant-company had been availing tax benefit on deferment of payment of tax for seven years. An amount was credited in excess as tax in the company's account, which was later refunded and deposited by the company. The tax liability for a particular year was quantified, and interest was charged without setting off the excess amount credited. The appellant argued that the excess amount should have been set off before calculating interest, as it was part of a tax deferment scheme. The Tribunal rejected the appellant's case, stating that after the deferment period ended, the Department could charge interest as per the relevant provisions of the tax act.

Adjustment of Excess Amount:
The appellant contended that the excess amount credited should have been adjusted towards the final tax due for the assessment year. The Excise and Taxation Department had returned the excess amount to the Industries Department, which was then credited to the company's account and subsequently deposited by the appellant. It was argued that the Assessing Authority should recalculate the interest after adjusting the excess amount received back. The Tribunal was deemed unjustified in upholding the levy of interest on the amount received in excess by the Excise and Taxation Department.

Judgment and Remand:
The court set aside the previous order and remanded the matter back to the Assessing Authority to recalculate the interest, the amount of tax to be deposited, and the date of deposit by excluding the period of excess amount received by the Excise and Taxation Department. The appeal was disposed of accordingly.