2019 (6) TMI 1533 - HC - VAT and Sales Tax

Maintainability of petition - availability of alternate remedy - Interest on belated payment of tax and penalty - Entry Tax Act - HELD THAT - Petition is rejected in limine since the question raised is a substantive legal issue not involving any questions of fact let alone disputed questions of fact that can certainly be raised in a writ petition. It is too well settled a proposition that interest may be levied only in the event of there being a specific enabling and substantive provision in the Enactment in question authorising such levy - In the present case there is admittedly no such provision in the Entry Tax Act 1990. Though various provisions enable the authorities to levy tax and penalty there is no entitlement therein to levy interest on the belated payment of tax and penalty which is essentially in the nature of penal interest. Reference to the provision of the Tamil Nadu General Sales Tax Act 1956 is misconceived as the Entry Tax Act as stated earlier is a compact and self-contained statute that does not draw upon any other law including the General Sales Tax Law in the matter of assessments thereunder. Petition allowed.

Summary

Issues:
Challenge to order levying interest on belated payment of Entry Tax and penalty. Maintainability of writ petition due to availability of alternate remedy.

Analysis:

Issue 1: Challenge to order levying interest on belated payment of Entry Tax and penalty
The petitioner contested an order imposing interest on belated payment of Entry Tax and penalty. The main argument raised was the absence of a substantive provision in the Entry Tax Act authorizing such levy, leading to the challenge on the grounds of legality. The High Court emphasized that interest can only be levied if there is a specific, enabling, and substantive provision in the relevant enactment. Referring to the Supreme Court's judgment in India Carbon Limited Vs. State of Assam, it was highlighted that provisions regarding interest in a statute are substantive law and must be explicitly stated. In this case, as per the Entry Tax Act, 1990, there was no provision empowering the imposition of penal interest, reinforcing the petitioner's argument.

Issue 2: Maintainability of writ petition due to availability of alternate remedy
A feeble challenge was raised regarding the maintainability of the writ petition based on the availability of an alternate remedy. The court swiftly rejected this challenge, stating that the issue raised was a substantive legal matter, not involving disputed questions of fact, thus justifying its consideration in a writ petition. The court underscored the importance of addressing legal issues promptly, especially when they pertain to the interpretation and application of substantive provisions in the law, as was the case with the challenge to the levy of interest on belated payment of Entry Tax and penalty.

Conclusion:
The High Court, after thorough analysis and reference to relevant legal precedents, quashed the impugned order levying interest on belated payment of Entry Tax and penalty. The judgment emphasized the necessity of a specific provision in the statute authorizing the imposition of interest, highlighting the substantive nature of such provisions. The decision clarified that the absence of such enabling provisions in the Entry Tax Act, 1990 rendered the imposition of penal interest invalid. Additionally, the court dismissed the challenge to the maintainability of the writ petition, affirming its jurisdiction to address substantive legal issues promptly.