2021 (2) TMI 1275 - HC - VAT and Sales Tax

Demand of interest under 24(3) of Tamil Nadu General Sales Tax Act - payment of additional sales tax and surcharge on reopening of assessment - HELD THAT - It is not as if the petitioner tried to evade payment of tax. He paid tax in terms of the self assessment made by him. When it was reopened and demand was made for payment of additional sales tax and surcharge, the petitioner complied with the said demand. Only if the petitioner had not complied with the demand set out in the assessment order passed by the respondent, the question of levy of interest will arise. In view of the prompt compliance by the petitioner, there is no justification in making demand for payment of interest. More than anything else, identically placed persons were given the benefit of waiver. On a person, who has paid the statutory levies, fastening liability to pay interest appears to be highly inequitable. The demand for payment of interest is not sustainable. The impugned demand order is quashed and the writ petition is allowed.

Summary

Issues:
1. Liability to pay additional sales tax and surcharge for the assessment year 1992-1993.
2. Validity of interest demanded from the petitioner for belated payment.

Analysis:
1. The petitioner, a registered dealer, faced an assessment for the year 1992-1993 under the Tamil Nadu General Sales Tax Act, 1959. Initially treating certain goods as declared goods, the petitioner paid tax at 4%. However, due to a Supreme Court decision categorizing the goods as non-declared, additional sales tax and surcharge were imposed. The petitioner complied with the demand promptly. Subsequently, interest was sought for the period from the original assessment year until payment. The court considered the timing of the transactions, the historical treatment of goods as declared, and the petitioner's compliance with the revised assessment. It noted a similar case where interest was not levied when demands were met before assessment dates.

2. The government argued for interest payment due to the delayed settlement of additional tax and surcharge. However, the court found the petitioner's actions compliant with the assessment order. It highlighted the inequity of imposing interest when similar individuals were granted waivers. Referring to relevant legal provisions, the court emphasized that interest should only be levied in case of default, which was not applicable in this scenario. Relying on previous judgments, the court ruled in favor of the petitioner, quashing the interest demand and allowing the writ petition without costs.

This comprehensive analysis of the judgment addresses the issues of liability for additional tax and surcharge, as well as the validity of interest demanded from the petitioner, providing a detailed breakdown of the court's reasoning and decision-making process.