2014 (3) TMI 513 - HC - VAT and Sales Tax

Imposition of interest u/s 74(7) of Delhi VAT Act, 2004 Jurisdiction of Objection Hearing Authority Held that - the power of the OHA to insist upon payment of interest is by way of incidental or supplementary one to enable enforcement of other provisions of the Act - two views are possible u/s 42(2) which requires dealers to pay interest in addition to the amount assessed , there can be a degree of relativity having regard to the circumstances in each case - to recover interest on the non-submission due to non-availability of forms amounts to pre-judging the issue Though the assessee was granted the benefit of concessional duty upon proper verification of the records as to the expenses or furnishing of the concerned forms - Later directions of the Tribunal set aside - Decided partly in favour of assesse.

Summary

Issues:
1. Interpretation of the power of the Objection Hearing Authority under Section 74(7) of the Delhi Value Added Tax Act, 2004 regarding the imposition of interest.

Analysis:
The petitioner raised a substantial question of law regarding whether the Objection Hearing Authority (OHA) could direct the imposition of interest under Section 74(7) of the Delhi Value Added Tax Act, 2004. The petitioner's objection to the Commissioner's order was accepted substantially, but the OHA directed the assessing authority to determine not only the tax due but also the interest component. The petitioner argued that the power of the OHA under Section 74(7) is limited and does not extend to directing the recovery of interest. The counsel relied on various judgments to support the contention that interest cannot be mandatorily paid and that there is subjectivity in determining the liability of the assessee. The OHA accepted the dealer's submissions regarding concessional duty, but the Tribunal found the OHA's direction to recover interest on non-submission due to non-availability of forms as prejudging the issue.

The Tribunal opined that the power of the OHA to insist upon payment of interest is supplementary to enforce other provisions of the Act. While Section 42(2) mandates dealers to pay interest in addition to the amount assessed, there can be relativity based on the circumstances of each case. In this case, the OHA's direction to recover interest was set aside as it was seen as prejudging the issue. The Tribunal found that the OHA's proceedings were wide, considering the power of the Commissioner as an appellate power. The Tribunal highlighted that the OHA's power to direct interest payment is incidental to enforce other Act provisions. The Tribunal set aside the OHA's direction to recover interest based on the dealer's entitlement to claim concessional rates, as it was deemed to prejudge the issue.

In conclusion, the appeal was partly allowed, setting aside the directions to recover interest on non-submission due to non-availability of forms. The judgment clarified the limitations of the OHA's power under Section 74(7) and emphasized the need to consider the circumstances of each case in determining the imposition of interest under the Delhi Value Added Tax Act, 2004.