2019 (6) TMI 751 - HC - VAT and Sales Tax

Interest on delayed payment of tax - construction of flats as works contract - Section 30(2) of Maharashtra Value Added Tax Act, 2002 - HELD THAT - The Appellant is not disputing its liability to pay tax. It also does not dispute that, there has been admittedly a delay in making payment of its tax. In this circumstances, provisions of Section 30(2) of the Act ispo facto, becomes applicable and the Appellant is liable to pay interest. No provision in the statute has been shown to us which permits waiver of interest on account of misunderstanding of the position in law on the part of an Assessee. The question as proposed does not give rise to any substantial question of law. Thus, not entertained - Appeal dismissed.

Summary

Issues:
Challenge to levy of interest under Section 30(2) of the Maharashtra Value Added Tax Act, 2002 for delayed payment of tax.

Analysis:
The appellant, engaged in construction business, challenged the levy of interest under Section 30(2) of the Act for delayed tax payment in the financial year 2007-08. The appellant argued that the delay was due to uncertainty regarding tax liability on construction of flats as works contract, which was clarified by a Supreme Court decision in the case of L & T v/s. State of Karnataka. The Supreme Court held that the agreement to sell flats constitutes a works contract, subject to tax only after entering into a contract with the flat purchaser. The appellant contended that interest should be deleted based on this clarification.

The Tribunal upheld the interest levy, stating that interest is consequential to delayed tax payment. It referenced a circular by the State exempting penalties but not interest for such cases. The Tribunal dismissed the appeal, emphasizing that the appellant did not dispute the tax liability or the delay in payment, making Section 30(2) applicable mandating interest payment. The court highlighted that a court decision clarifies the law but does not create it, and ignorance of the law does not warrant interest waiver.

The court found no substantial question of law in the appellant's argument and dismissed the appeal, confirming the appellant's liability to pay interest under Section 30(2) for delayed tax payment. The judgment reaffirmed that the law applies regardless of an assessee's understanding or misunderstanding, emphasizing the statutory obligation to pay interest for delayed tax payments.

Therefore, the appeal challenging the interest levy under Section 30(2) of the Maharashtra Value Added Tax Act, 2002 for delayed tax payment in the financial year 2007-08 was dismissed by the High Court, upholding the Tribunal's decision and reinforcing the statutory requirement for interest payment in such cases.