2021 (3) TMI 135 - HC - VAT and Sales Tax

Levy of Interest for delayed remittance of Additional Sales Tax (AST) - section 24(3) of TNGST Act - period 2006-07 - HELD THAT - The petitioner has filed returns in Form A-1, under a self-assessment scheme. It was thus incumbent upon the petitioner to have included (i) the correct undisputed turnover, as well as (ii) the correct liability in respect of that turnover. There is no dispute with respect to the turnover itself and there is also no dispute with respect to the liability under TNGST. However, the petitioner failed to remit the AST in regard to the turnover returned which is a lapse in self-assessment. The distinction noted by the Bench is very relevant in this case. The Bench states that the default arising on non-payment of tax on an admitted liability in the case of a self-assessment will attract an automatic levy of interest, whereas, default in filing an incomplete or incorrect return would attract interest only based on the adjudication by the Assessing Officer. The present assessment is based on a self-assessment and liability to AST is thus automatic. The question of determination is not relevant in the present case. It is relevant that the petitioner does not dispute either the turnover or the liability to AST. Immediately on being put to notice, at the first instance (on 10.11.2009) the petitioner made the entire payment of AST by 30.11.2009. Liability to AST is thus not in dispute - in the light of judgment in EID. PARRY (INDIA) LTD. VERSUS ASSISTANT COMMISSIONER (CT), CAC, CHENNAI (AND OTHER CASES) 1998 (12) TMI 589 - TAMIL NADU TAXATION SPECIAL TRIBUNAL this case attracts interest under Section 24(3) automatically and there is no infirmity in the order challenged. Petition dismissed - decided against petitioner.

Summary

Issues Involved:
1. Levy of interest under Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act) for delayed remittance of Additional Sales Tax (AST).
2. Applicability of judgments from higher courts in determining interest liability.
3. Interpretation of self-assessment and automatic liability under TNGST Act.

Issue-wise Detailed Analysis:

1. Levy of Interest under Section 24(3) of TNGST Act for Delayed Remittance of AST:
The petitioner challenged the order of assessment dated 19.08.2020, which levied interest under Section 24(3) of the TNGST Act for the delayed remittance of AST for the period 2006-07. The petitioner had filed monthly returns and reported a taxable turnover of approximately ?23.50 crores, with no dispute on the turnover or tax computed. However, the petitioner had a liability to AST under the Tamil Nadu Additional Sales Tax Act, 1970 (TNAST Act), as its turnover fell within the slab of ?10 to 25 crores. A notice was issued on 10.11.2009, demanding AST, which the petitioner paid in installments. Subsequently, a notice dated 22.12.2009 demanded interest for delayed payment of AST, which was challenged and led to the impugned order.

2. Applicability of Judgments from Higher Courts in Determining Interest Liability:
The petitioner relied on the Supreme Court's judgment in E.I.D. Parry (India) Ltd. v. Assistant Commissioner of Commercial Taxes and the decision of the Division Bench of the Madras High Court in Kone Elevator India Ltd. v. Commercial Tax Officer. The Supreme Court in E.I.D. Parry held that interest under Section 24(3) could only be charged if an assessment determined the additional turnover and raised a demand. The Division Bench in Kone Elevator interpreted that interest liability arises only when a determination is made, and there is a delay in remitting the amount demanded. However, the court distinguished the present case, stating that the petitioner was under a self-assessment scheme, and the liability to AST was automatic, making the cited judgments inapplicable.

3. Interpretation of Self-Assessment and Automatic Liability under TNGST Act:
The court emphasized that under the self-assessment scheme, the petitioner was required to include the correct turnover and liability in the returns. The failure to remit AST on the returned turnover was a lapse in self-assessment, attracting automatic interest under Section 24(3). The court noted that the petitioner did not dispute the turnover or AST liability and had paid the AST upon notice. The court concluded that the levy of interest was justified as the liability to AST was automatic under the self-assessment scheme, and there was no need for a separate determination by the assessing authority.

Conclusion:
The court dismissed the writ petition, upholding the levy of interest under Section 24(3) of the TNGST Act for the delayed remittance of AST. The court found no infirmity in the impugned order and held that the petitioner’s liability to AST was automatic under the self-assessment scheme, making the cited judgments inapplicable. The connected miscellaneous petition was also dismissed.