2012 (4) TMI 58 - HC - VAT and Sales Tax

Demand - whether imposing/charging of interest under Section 30(4) of the Maharashtra Value Added Tax Act 2002 in respect of the late payment of tax for the years 2005-06, 2006-07 and 2007-08 is valid in law - Consequent to the Intimation, on 20 August 2009 the Petitioner filed revised returns for the years 2005-06, 2006-07 and 2007-08 and also paid the differential tax demanded consequent to the audit, aggregating to ₹ 41,38,416/- along with interest thereon under Section 30(3) of the Act - The demand for interest is not for the period prior to 1 July 2009 as the interest is being charged not with regard to a delay (period/time wise) in making the payment of tax to the State but is charged at a flat rate of 25 per cent of the additional tax payable as per the revised returns - In the present case, the interest is being charged at a flat rate and has no relation to the length of time(delay) in making the payment of tax - Petition is dismissed

Summary

Issues:
Challenge to order imposing interest under Section 30(4) of the Maharashtra Value Added Tax Act 2002; Application of Section 30(4) retrospectively for the years 2005-06, 2006-07, and 2007-08; Validity of orders dated 23 September 2011; Availability of alternative remedy under Section 85 of the Act; Interpretation of Section 30(4) in relation to the timeline of events; Reliance on the decision of the Sales Tax Tribunal in Nitco Paints case; Compliance with legal principles from Supreme Court decisions.

Detailed Analysis:
The petition challenged an order imposing interest under Section 30(4) of the Maharashtra Value Added Tax Act 2002 for the years 2005-06, 2006-07, and 2007-08. The petitioner argued that the retrospective application of Section 30(4) was invalid due to the amendment's effective date of 1 July 2009. The Deputy Commissioner of Sales Tax issued show cause notices based on Section 30(4) for the mentioned years, leading to the petitioner's appeal to the Joint Commissioner of Sales Tax (Appeal), which was dismissed. The petitioner then sought a Writ of Certiorari to quash the orders dated 23 September 2011.

The core issue revolved around whether charging interest under Section 30(4) for late tax payments in the mentioned years was legally valid. The court analyzed the timeline of events, noting that the audit and intimation of additional tax payable were post 1 July 2009, when Section 30(4) came into effect. The court emphasized that Section 30(4) did not charge interest based on the delay in tax payment but a flat rate tied to additional tax from revised returns. As such, the court concluded that Section 30(4) was not applied retrospectively in this case, as the actions triggering the interest demand occurred after 1 July 2009.

Regarding the reliance on the Nitco Paints case, the court clarified that its previous order did not disturb the findings related to the imposition of penalty under the amended provision. The court dismissed the petitioner's argument that the orders gave retrospective effect to Section 30(4), emphasizing that the interest was not for the period before 1 July 2009. The court also addressed the Supreme Court decisions cited by the petitioners, highlighting their inapplicability to the present case due to differing legal contexts.

Ultimately, the court found no merit in the petitioner's contention of retrospective application of Section 30(4) and dismissed the petition, with no costs imposed. The judgment upheld the validity of the orders dated 23 September 2011, emphasizing the non-retrospective application of Section 30(4) in the case at hand.