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2023 (12) TMI 109 - HC - VAT and Sales TaxLiability of interest for the delay in remitting the turnover tax - Rate of interest was not prescribed during the relevant period - HELD THAT - Under the notification dated 26.03.2022 in Ext. P2, the turnover tax under Clause (i)(a) of Subsection (2) of Section 5 of the KGST Act on sale of foreign liquor sold for the period 22.05.2020 to 21.12.2020 and 15.06.2021 to 25.09.2021 by the Bar hotels has been reduced to 5%. Not only this, if some dealer has paid the excess turnover tax for the said period, the same was to be adjusted towards the existing or future liability - The notification itself prescribes that for the said period, the turnover tax would be 5%. Thus, it has been given effect to for the period 22.05.2020 to 21.12.2020 and 15.06.2021 to 25.09.2021. Since the rate has been prescribed for parcel sale by the Ext. P2 notification for the said period, the tax paid on the said sale at the rate of 5% on or before 30.04.2022 should be deemed to be within time as per the Cabinet Decision and no interest would be payable on the turnover tax in respect of the said sale up to 30.04.2022. However, if any dealer has paid the tax after 30.04.2022, he would be liable to pay interest and penalty as may be determined by the competent authority. From the notification in Ext. P1, though the petitioners were permitted to effect the parcel sales, the rate was not prescribed, and the rate has been prescribed only by the notification in Ext. P2 dated 26.03.2022 - in the absence of the rates prescribed before 26.03.2022, any demand and levy of tax could not have been valid. After the rate of the turnover tax has been prescribed, the petitioners ought to have remitted the tax before 30.04.2022. In cases where the returns are filed by 31.03.2022, and ToT was cleared on or before 30.04.2022, the FL3/FL11 licensees are not liable to pay interest for delayed payment of the turnover tax for the period 22.05.2020 to 21.12.2020 and 15.06.2021 to 25.09.2021 in Financial Years 2020-21 and 2021-22 - If any FL3/FL11 licensees did not file the return of ToT in respect of the taxable turnover of the parcel sales of IMFL for the period of authorised sale on or before 31.03.2022 and not paid the ToT at 5% by 30.04.2022, such a licensee/dealer would be liable to pay interest for delayed payment of ToT with effect from 01.05.2022 till the date of payment and for delay in filing returns - cases are remitted back to the Assessing Authority to pass fresh Assessment Orders.
Issues Involved:
1. Interest liability on delayed remittance of turnover tax (ToT) for Financial Years 2020-21 and 2021-22. 2. Validity of the rate of ToT for parcel sales of Indian Made Foreign Liquor (IMFL) by FL3/FL11 licensees. 3. Applicability of interest and penalty for delayed tax payments. Summary: Interest Liability on Delayed Remittance of Turnover Tax (ToT): The petitioners, FL3/FL11 licensees, challenged the interest liability for delayed remittance of ToT for the Financial Years 2020-21 and 2021-22. The petitioners argued that due to the COVID-19 pandemic, they were permitted to sell IMFL in sealed bottles, but the rate of ToT was not prescribed until the notification SRO No. 297/2022 dated 26.03.2022. Consequently, they could not file returns or remit ToT timely. Validity of the Rate of ToT for Parcel Sales: The Government Order G.O.(MS) No. 41/2020/TD dated 18.05.2020 allowed FL3/FL11 licensees to sell IMFL in sealed bottles due to COVID-19 restrictions. However, the rate of ToT was not specified until the notification SRO No. 297/2022, which fixed the ToT rate at 5% for parcel sales for the periods 22.05.2020 to 21.12.2020 and 15.06.2021 to 25.09.2021. The petitioners contended that they could not file returns or remit ToT at 5% due to the lack of clarity and the tax portal's inability to accept such returns. Applicability of Interest and Penalty: The State Government argued that interest is a statutory liability under Section 23(3) of the KGST Act and cannot be waived without explicit statutory provision. The petitioners were liable to pay interest for delayed payment of ToT. However, the court noted that the notification SRO No. 297/2022 should be given a purposive interpretation, and the petitioners should not be penalized for the period before the rate was prescribed. Judgment: 1. No Interest for Timely Compliance: If returns were filed by 31.03.2022, and ToT was cleared by 30.04.2022, the FL3/FL11 licensees are not liable to pay interest for the delayed payment of ToT for the periods 22.05.2020 to 21.12.2020 and 15.06.2021 to 25.09.2021. 2. Interest for Delayed Compliance: FL3/FL11 licensees who did not file returns by 31.03.2022 or did not pay ToT by 30.04.2022 are liable to pay interest for delayed payment from 01.05.2022 till the date of payment and for delay in filing returns. 3. Remittance for Fresh Assessment: The impugned orders are quashed, and cases are remitted back to the Assessing Authority to pass fresh Assessment Orders based on the above observations. All interlocutory applications regarding interim matters stand closed.
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