2024 (7) TMI 3 - HC - VAT and Sales Tax

Challenge to assessment order - levy of interest in terms of the Section 22 of the AGST Act, 1993 - HELD THAT - The Hon ble Apex court in 2006 (11) TMI 323 - SUPREME COURT remanded the matter to the assessing authority to resolve the factual controversy whether the appellate company had collected sales tax from consumers through various dealers on entire resale price and if the answer is yes, the appellant company would liable to deposit entire sales tax amount collected from the consumers along with 9% interest from the date of collecting the amount towards the sales tax. It is apposite to mention herein that the earlier assessments as well as the notices of demand were set aside by the Hon ble Apex Court. The initial notices were issued in the year 1996 in all the cases including the earlier litigations to produce books of accounts and records in connection with the purchase and sale of their products. Subsequently in the month of March 1996, the petitioner company was asked to show cause as to why penal action should not be initiated. Subsequently, assessment order was passed in the month of July 2001 and appeal challenging such assessment order by the appellate company were dismissed in the month of April 2002. In the case in hand, the impugned assessment order shows that after the order of the Hon ble Apex court, the balance due was nil. However, taking recourse to sub-section 3 of section 22, the interest was imposed on the ground that amount due was paid subsequent to its due date. To summarise it is the contention of the assessing authority that though after the order of the Hon ble Apex court there was no balance due however, the entire due was paid subsequent to the date it has fallen due and therefore, interest was leviable under section 22(3) of the Act. The impugned decisions to impose interest by the tax authorities are interfered with - petition disposed off.

Issues Involved:
1. Validity of the assessment orders and demand notices issued by the tax authorities.
2. Determination of whether the surcharge collected by the petitioner should be included in the sale price.
3. Imposition of interest on delayed payment of taxes.
4. Scope of remand by the Supreme Court and subsequent assessments.
5. Applicability of Section 22 of the Assam General Sales Tax Act, 1993.

Issue-wise Detailed Analysis:

1. Validity of the Assessment Orders and Demand Notices:
The writ petitions challenge the determination made by the Deputy Commissioner of Taxes (Appeals) that dismissed the appeals against the orders of assessment. The petitioners argue that the Assistant Commissioner of Taxes exceeded the directions issued by the Division Bench, which had previously determined that no tax could be levied if there was no tax demand before the issuance of the demand notice. The appellate authority failed to consider the submissions correctly and erred in law by holding that the statement submitted by the company was not in accordance with Section 16 (1) (2) of the Act.

2. Determination of Whether the Surcharge Collected by the Petitioner Should be Included in the Sale Price:
The Superintendent of Taxes held that the sale price of the petitioner company, which included the surcharge collected for the Central Government, should be treated as the first sale under Section 8 (1) (a) of the Act, 1993, read with Rule 12 of the Rules, 1993. This was based on the explanation that the sale price exceeded 40% of the purchase price. The petitioner contended that the surcharge should be excluded from the sale price calculation as it was collected on behalf of the Central Government and contributed to the "Oil Pool Account."

3. Imposition of Interest on Delayed Payment of Taxes:
The Division Bench had earlier determined that if there was no tax demand after de novo assessment, the question of interest payment for nil demand does not arise. The Assistant Commissioner of Taxes, however, imposed interest under Section 22 (3) of the Act, 1993, on the ground that the amount due was paid after the due date. The appellate authority supported this by stating that interest was inevitable for delayed payments.

4. Scope of Remand by the Supreme Court and Subsequent Assessments:
The Supreme Court remanded the matter to resolve whether the petitioner company had collected sales tax from consumers on the entire resale price. If so, the company was liable to deposit the entire sales tax collected along with 9% interest. The subsequent assessments found that the petitioner had not collected any amount by way of sales tax, but imposed interest on the difference between the resale price and the purchase price due to delayed payment.

5. Applicability of Section 22 of the Assam General Sales Tax Act, 1993:
Section 22 mandates interest payment in three scenarios: deficit payment of tax as per returns, deficit payment after assessment, and incorrect turnover in returns leading to a demand notice exceeding 10% of the amount claimed. The Division Bench's earlier decision held that no interest could be levied if the assessment found no taxable due. This principle was applied to the present batch of writ petitions, where the initial notices and assessments were set aside, and fresh assessments found no balance due.

Conclusion:
The High Court concluded that the determination made by the Division Bench was binding and that the tax authorities could not impose interest in derogation of this determination. The impugned decisions to impose interest were interfered with, and the court held that the parties should bear their own costs.

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