1991 (5) TMI 254 - HC - VAT and Sales Tax

Summary

Issues:
1. Mandamus for direction not to realize interest charged on the petitioner for assessment years 1981-82 and 1984-85.

Analysis:
The petitioner, a dealer registered under relevant tax acts, challenged the interest charged on them for assessment years 1981-82 and 1984-85. The assessment order for 1981-82 demanded a sum from the petitioner due to non-production of a bank certificate for a deposited cheque. The petitioner claimed to have submitted the cheque, but the department did not encash it and did not inform the petitioner about its status. The court noted that the department should have notified the petitioner if the cheque was not encashed, and since no such communication was made, the interest charged was deemed incorrect. A similar situation arose for the assessment year 1984-85, where the petitioner deposited a cheque but was charged interest without proper communication from the department. Consequently, the court directed the tax authorities not to recover the interest amount from the petitioner for the mentioned assessment years.

The judgment emphasizes the importance of proper communication between tax authorities and taxpayers regarding the status of deposited cheques. It highlights that if a cheque is submitted by the taxpayer and not encashed by the department, the onus is on the department to inform the taxpayer about the same. Failure to provide such information can result in incorrect imposition of interest charges. The court's decision to disallow the recovery of interest for the petitioner is based on the principle that the taxpayer should not be penalized for the department's failure to communicate regarding the status of deposited cheques. The ruling ensures fairness and accountability in tax assessments by requiring clear and timely communication between tax authorities and taxpayers in such matters.