2012 (7) TMI 869 - HC - VAT and Sales Tax

Whether an aggrieved dealer, who appeals to the Tribunal constituted under the Delhi Sales Tax Act (order of which ought to be now considered by the VAT Tribunal under section 76 of the Delhi VAT Act), is to deposit as pre-condition for hearing the entire amount of tax as determined as well as interest for the relevant period? Held that - A combined reading of sections 11B, 11D and section 20 of the Act shows that amount of tax and penalty as well as interest payable under the Act can be recovered as arrears of land revenue. The amount of interest is payable by the dealer who fails to pay the amount of tax due from him as required by section 10(4). Section 11D(2) speaks of the rate of interest for different periods and section 11D(3) speaks of the mode of calculation of the interest. Sub-clauses (ii) and (iii) of section 11D(3) makes it further clear that amount of interest payable under section 11D shall be in addition to the penalty imposed under the Act and for the purpose of collection and recovery it shall be deemed to be tax. By applying the principles of interpretation of statute, we find that the omission of the expression or interest payable from section 20(5) and proviso thereto is not accidental but is deliberate and the Legislature never intended that the appellant must pay the amount of interest before an appeal filed under section 20 can be entertained by the appellate authority. We, therefore, set aside the majority order of the Tribunal and direct the appellant to comply with the order of the Chairman in the dissenting opinion, and deposit the amount indicated. Upon satisfying itself that the appellant has complied with the said direction, the Tribunal shall proceed to hear this case on the merits.

Summary

Issues:
Whether an aggrieved dealer appealing to the Tribunal needs to deposit the entire amount of tax and interest as determined.

Analysis:

Issue 1: Deposit of entire tax amount and interest
The case revolved around the requirement for an aggrieved dealer to deposit the full tax liability and interest before their appeal could be heard by the Tribunal. The Revenue contended that such a deposit was necessary as per section 27(4) of the Delhi Sales Tax Act, which deems interest payable under the Act as tax. The majority order of the Tribunal upheld this view, while the Chairman dissented, stating that interest liability need not be deposited at the appeal stage. The appellant cited judgments from the Allahabad and Punjab and Haryana High Courts to support their argument against the majority order's decision. The court examined the relevant provisions of the Delhi Sales Tax Act and the Delhi VAT Act, emphasizing the need for strict interpretation of appeal conditions. Drawing parallels with a previous judgment from the Punjab and Haryana High Court, the court concluded that the dissenting opinion aligning with the views of the other High Courts was sound. Consequently, the court set aside the majority order and directed the appellant to comply with the dissenting opinion, depositing the amount indicated before the Tribunal could proceed to hear the case on its merits.

In conclusion, the judgment clarified the requirement for an aggrieved dealer appealing to the Tribunal to deposit the entire tax amount and interest as determined, based on the provisions of the Delhi Sales Tax Act. The court's decision was influenced by the interpretation of similar provisions in other High Court judgments, emphasizing the need for strict compliance with appeal conditions.