2016 (7) TMI 773 - HC - VAT and Sales Tax

Levy of interest u/s 47(4A) of Gujarat sales tax - Levy of penalty u/s 45(6) - the dealer at the time of filing of the sales tax return had not deposited the entire amount payable thereunder - but the amount was paid before the sales tax assessment - Held that - In the present case, since the dealer had already paid the entire amount prior to the date of the assessment order, the dealer was liable to pay interest on the differential amount till the date such amount was actually paid and not till the date of assessment order, as is sought to be contended by the learned Assistant Government Pleader on behalf of the appellant. Regarding penalty - Held that - Tribunal upon appreciation of the material on record has found the explanation tendered by the dealer to be acceptable, namely, that the dealer was under a bonafide belief that the turnover tax was not required to be paid and was required to be deferred, which has resulted in the difference of tax assessed and tax paid. It is in these circumstances that the Tribunal has exercised discretion and reduced the penalty to 10%. In the light of the fact that the order passed by the Tribunal is merely a discretionary order, in the opinion of this court, the same would not give rise to any question of law warranting interference. - Decided against the revenue.

Summary

Issues:
Challenge to order of Gujarat Value Added Tax Tribunal on interest and penalty under GVAT Act.

Analysis:
1. The appellant State of Gujarat challenged the order of the Gujarat Value Added Tax Tribunal, proposing three substantial questions of law related to interest under section 47(4A) of the GVAT Act and the reduction of penalty under section 45(6) of the Act.

2. The facts of the case involved an assessment order raising a demand, with the dealer contending that interest and penalty were not applicable as they had paid more than what was due. The first appellate authority disagreed, leading to an appeal before the Tribunal, which found the dealer not liable for interest post-payment and reduced the penalty to 10% based on a bonafide belief explanation.

3. The appellant argued that interest under section 47(4A)(b) of the GST Act is payable from the time prescribed for payment of tax until the assessment order, regardless of any ad-hoc payments made. The Tribunal's decision to not levy interest post-ad-hoc payment was challenged by the appellant.

4. The court analyzed the provisions of section 47 of the GST Act, emphasizing the requirement for a dealer to pay tax as prescribed and the implications of sub-sections (4A)(a) and (b) regarding interest on unpaid tax amounts.

5. The court concluded that a harmonious reading of sub-sections (4A)(a) and (b) of section 47 indicated that interest is payable on the differential amount from the prescribed date until the date of payment, not until the assessment order, as contended by the appellant.

6. Regarding the reduction of penalty to 10%, the court upheld the Tribunal's decision based on a bonafide belief explanation provided by the dealer, stating that it was a discretionary order not warranting interference on legal grounds.

7. The court found no legal infirmity in the Tribunal's order, dismissing the appeal as it did not raise any substantial questions of law warranting interference.