2000 (4) TMI 47 - HC - VAT and Sales Tax

Summary

Issues:
Petition for withdrawal, cancellation, and rescind of notice of demand under Central Sales Tax Act, 1956 for late payment of taxes and interest, confirmation of assessment order, legality of interest charges, applicability of writ jurisdiction for refund, limitation period for claiming refund.

Analysis:
The petitioner, a unit of a corporation, engaged in jute goods manufacturing, faced financial crisis post-management change in 1981. The petitioner filed returns and paid taxes under the Central Sales Tax Act for the period ending on 31-3-1985, albeit with delays. The tax assessment by Respondent No. 1 resulted in a demand for tax and penalty. Despite paying in excess, interest was levied under Section 10A of the Bengal Finance (Sales Tax) Act, 1941. The appeal against this interest assessment was rejected, confirming the interest amount. Subsequently, a notice for payment of assessed dues towards interest was issued, prompting the petitioner's writ petition for withdrawal and cancellation of the demand notice.

The petitioner argued that interest levied under the Central Act was illegal based on relevant judgments. The application of general Sales Tax Laws of the State for Central Act assessment was deemed incorrect, as the Central Act lacked substantive provisions for interest levy. The Supreme Court's interpretation of Section 9(2) clarified that interest could not be imposed without specific Central Act provisions, making the interest charge invalid. The petitioner invoked Article 226 of the Constitution for redressal.

In response, the Respondent contended that the case concerned interest, not tax, suggesting a refund suit as the proper remedy. The Respondent argued against applying the judgment on Section 9(2) as it dealt with procedural versus substantive provisions. The petitioner cited precedents supporting refund under writ jurisdiction and the applicability of Article 226 for claiming refunds within a reasonable time frame.

The judgment emphasized that interest is linked to the original tax claim and can be refunded if deemed invalid. The court ruled in favor of the petitioner, directing the authority to refund the interest collected within a specified period. The judgment highlighted the petitioner's entitlement to invoke writ jurisdiction for redressal and addressed the issue of limitation for claiming refunds, allowing the petition within a reasonable time frame. The court's decision granted the refund and rejected the stay application, with no costs imposed on either party.