9911796707
TMI Blog1995 (3) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment years 1981-82 and 1982-83 the interest was charged at Rs. 35,018 and Rs. 86,834 respectively. The aforesaid amount of Rs. 1,21,857 was included in the claim of Rs. 1,50,541 filed by the assessee and disallowed by the revenue authorities. The difference was on account of penalty as well tax charged at Rs. 24,250 and Rs. 4,434 respectively. The interest was paid on account of delayed payment of the sales-tax becoming due on the quarterly returns filed by the assessee. The interest so charged was of compensatory nature and hence was allowable under section 37(1) of the Act. This is as held in various decisions of both the Supreme Court as well the High Courts. To name a few they are :--- (1) Mahalakshmi Sugar Mills Co. v. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the provisions of the relevant statute providing for the payment of such impost. In this respect we find that the interest and the penalty have been levied under the Central Sales-tax Act for both the assessment years 1981-82 and 1982-83. These are as under : Assessment Year 1981-82 Interest : ------------------------------------------------------------------- Quarter Tax due Late by Amount Interest -------------------- Rs. Rs. ------------------------------------------------------------------- 1st 31-7-1981 18 months 5,741 1,537 2nd 30-10-1981 15 months 8,400 1,848 3rd 31-12-1981 12 months 18,400 3,220 4th 30-4-1982 9 months 2,18,548.61 28,418 Penalty under section 9(2) of the Act -- 3,000 Assessment Year 1982-83 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of tax, registration of the transferee of any business, imposition of the tax liability of a person carrying on business on the transferee of, or successor to, such business, transfer of liability of any firm or Hindu undivided family to pay tax in the event of the dissolution of such firm or partition of such family, recovery of tax from third parties, appeals, reviews, revisions, references, [refunds, rebates, penalties,] [charging or payment of interest,] compounding of offences and treatment of documents furnished by a dealer as confidential shall apply accordingly : Provided that if in any State or part thereof there is no general sales tax law in force, the Central Government may, by rules made in this behalf make necessary provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as are prescribed. In the rules, quarterly returns have been prescribed. Every return is to be submitted within 30 days of the close of the quarter along with the proof of payment of tax. In case of failure to pay tax, simple interest is chargeable at the rate of 1% for the first month and 1 1/2% per month thereafter. These provisions have been made applicable to Central Sales-tax Act retrospectively by Act No. 103 of 1976. Thus statutory rate of interest has been provided as well the period for which a person is required to pay interest. No discretion is left with the Assessing Officer with any of these matters. The levy of interest is automatic and is by operation of law. The question is whether the impost under these provisions which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided for speedy and prompt collection of revenue. For this we would rely on decisions of the various Courts. In the case of Associated Cement Co. Ltd. v. CTO [1981] 48 STC 466, their Lordships of Supreme Court have held that such interest is compensatory in character and not penal. Furthermore in case of CIT v. Udaipur Distillery [1986] 63 STC 126 (as given at p. 1.274 in the Commentary of the General Sales-tax Law in Haryana (1989) 3rd Edition by B.L. Gulati) it was held by Rajasthan High Court, " the liability of interest on delayed payment of sales tax is a statutory obligation of the dealer and is automatic, and no specific order is required. Thus, it is a part of sales tax and as the sales tax is paid by a dealer for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to pay interest should accrue. The liability to pay interest is as certain as the liability to pay cess. As soon as the prescribed date is crossed without payment of the cess, interest begins to accrue. It is not a penalty, for which provision has been separately made by section 3 (5). Nor is it a penalty with the meaning of section 4, which provides for a criminal liability and a criminal prosecution. The penalty payable under section 3(5) lies in the discretion of the collecting officer or authority. In the case of the penalty under section 4, no prosecution can be instituted unless, under section 5(1), a complaint is made by under the authority of the Cane Commissioner or the District Magistrate. In truth, the interest provided for u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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