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TMI Blog1998 (12) TMI 526X X X X Extracts X X X X X X X X Extracts X X X X ..... ble. - Civil Appeal No. 13193-13214 of 1996, - - - Dated:- 1-12-1998 - BHARUCHA S.P. AND RAJENDRA BABU S. JJ. Dipankar Gupta and Bharat Aggarwal, Senior Advocates [D. Aggarwal, Ms. Purnima Singh and Suman J. Khaitan (for M/s. Khaitan Co.) Advocates, with them], for the respondent. R.C. Verma, C. Siddharth and R.B. Misra, Advocates, for the appellant. -------------------------------------------------- H.N. TILHARI, J.- Revision Nos. 107 to 117 of 1990 as well as Revision Nos. 1 to 11 of 1991 do arise from one common judgment delivered by the Sales Tax Tribunal, U.P., Lucknow, on September 24, 1990 relating to assessment years 1975-76 (Central sales tax and U.P. sales tax), 1976-77 (both Central and U.P. sales tax), 1977-78 (both Central and U.P. sales tax), 1978-79 (both Central and U.P. sales tax), 1979-80 (both Central and U.P. sales tax) and 1980-81 (both Central and U.P. sales tax). Revision Nos. 107 to 117 of 1990 have been filed by the assessee, M/s. Hindustan Aluminium Corporation, against one and same order dated September 24, 1990 governing all cases on the point involved and given in 11 appeals filed by the assessee. Revision Nos. 1 to 11 of 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter dated September 20, 1974-annexure-2-required Hindalco to contact the local Sales Tax Officer and this was in reply to the applicant's letter dated July 1, 1974. The applicant's case has been that Hindalco as such wrote a letter to the Sales Tax Officer, Mirzapur, with a copy to the Assistant Commissioner, Sales Tax (E), Varanasi, to clarify the position to inform about the proper rate of tax on aluminium per return of post. The revisionist's case is that on October 1, 1974 a notice was issued by the Sales Tax Officer, Robertsganj, in respect of the first quarter of the assessment year 1974-75 of the applicant Hindalco. Vide notice dated October 7, 1974 the Sales Tax Officer, Mirzapur, required the applicant to be present before him along with the books of account for the assessment years 1973-74 and 1974-75. The applicant's case further is that aluminium is a metal covered by entry serial No. 6 of the notification dated December 1, 1973 and that the applicant Hindalco reiterated this stand apart from personal hearing which took place on October 7, 1974, by letter dated October 10, 1974. Notices were issued in respect of various quarters of the assessment years 1973-74 and 19747 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lco requested the Sales Tax Officer and Assistant Commissioner to clarify the position and by letter dated July 16, 1975 Hindalco required the Deputy Commissioner, Sales Tax, to clarify the correct rates of the sales tax. On August 14, 1975, the U.P. Legislature passed the U.P. Sales Tax (Amendment and Validation) Act, 1975 of which section 31(7) is relevant and which is quoted hereinafter: "31(7). In the Schedule to Government Notification No. ST-II- 4949/X-10(2)-74, dated May 30, 1975, in the entry in column II against serial No. 1, for the words "and alloys", the words "and alloys including sheets and circle used in the manufacture of brasswares and scraps containing only any of the metals copper, tin, zinc or nickel" shall be substituted and be deemed always to have been substituted." Item No. 1 of Schedule to notification dated May 30, 1975 as amended by section 31(7) of U.P. Act No. 38 of 1975 reads as under: "1. All kinds of minerals, ores, metals and alloys including sheets and circle used in the manufacture of brasswares and scraps containing only any of the metals copper, tin, zinc or nickel except those included in any other notifications issued under the Act." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court by a detailed judgment given in W.P. No. 107 of 1976 Reported in [1978] 41 STC 147 (All.) (Hindustan Aluminium Corporation Ltd. v. State of Uttar Pradesh). held that apart from aluminium ingots, aluminium alloy ingots, wire bar and billets have all been covered by the description metal and alloys. This Court further held that aluminium rolled and extrusion shapes were not covered by the entry metals and alloys. This Court further directed the Sales Tax Officer to look further and to decide the question if properzi redraw rods fall within the description of metal and alloys. According to the applicant, the applicant-dealer filed a special leave petition from the judgment and order dated November 17, 1976 of this Court in C.M. Writ Petition No. 107 of 1976 before the honourable Supreme Court with the contention that aluminium in the shape and form of rolled and extrusion should be covered by entry "all kinds of metals and alloys", the leave was admitted in August, 1977. According to the applicant- dealer meanwhile under the orders of the High Court aforesaid, the assessing authority, i.e., Sales Tax Officer, Mirzapur decided the matter and held that properzi redraw rods were ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest from the date of order of the Assistant Sales Tax Commissioner (Judicial), Varanasi. The dealer preferred 11 appeals before the Tribunal. The Full Bench of the Tribunal (consisting of A.N. Gupta, President of the Tribunal, Vimal Kishore and M.M. Diwan, Members of the Tribunal) dismissed the 11 appeals after having taken the view that there is no question of equity about the tax but the case is that of imposition of tax in the matter which was before the Tribunal. The question before the Tribunal for consideration was that of levy of interest which the Tribunal opined to be something of compensatory nature. The Tribunal held that in cases where the question of compensation comes equity and equitable considerations must also step in necessarily. The Tribunal distinguished the two types of assessees, i.e., one who does not collect tax from its customers and other who collects and retains to utilise the same for its own purposes and took the view that the two cannot be counted as in the case of former, i.e., the assessee who does not collect the tax from the customers, the question of bona fides would be material, in the latter case, i.e., one who collects the tax and retains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er cent. The learned counsel submitted that the dispute was to the effect that according to the said department aluminium ingots alone fall in the category of metal while all other items were to be treated as unclassified goods and the tax chargeable was 7 per cent on all items except ingots on which it was 2 per cent while the dealer's case was that on items covered under the category of metals and alloys the rate of tax would be 2 per cent plus 1 per cent. There being a dispute about the rate of tax and the dealer having disputed the admitted tax or the tax rate admitted by him and once the said dispute having been finally decided by the Supreme Court by judgment dated July 28, 1981 and the assessee having deposited the difference of tax within a period of ten days, i.e., during the period July 29, 1981 to August 8, 1981 the dealer was not liable to be subjected to interest in view of the provisions of section 8 of the U.P. Sales Tax Act. The learned counsel further submitted what sub- section (1) of section 8 of the Act requires is that the dealer shall deposit within the time prescribed the tax admittedly payable by him, failing which simple interest at the rate of 2 per cent p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r penalty on the revisionist-applicant exercising a power not vested as section 8 of the Act which confers a power to impose interest or penalty in the circumstances did not come into play and operation till the matter, i.e., rate of tax remain disputed. On behalf of the Commissioner, Sales Tax, the learned Standing Counsel submitted that tax admittedly payable refers to turnover and there was no question of reference to tax or admitted or disputed rate of tax. Shri Tripathi, learned Standing Counsel submitted that statutes imposing necessary burden are subject to the rule of strict construction and what is clearly said or provided in the Act is to be taken and not what is intendment. He submitted that tax or imposing of tax carries with itself the elements of compulsion, and as such, the concept of hardship to the assessee is immaterial. Shri Tripathi referred to certain passages from Interpretation of Statutes by Maxwell and submitted that statutory provisions regarding collection of tax are to be strictly observed as the statute is designed to prevent the tax evasion so the provisions of the Act have to be given full effect. He submitted interest is charged for illegal retention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rusion sheets and forms during the period of 12 days, i.e., by and before August 8, 1981. As a matter of fact as the facts disclose there has been a dispute which has been pursued bona fide up to the Supreme Court. This factual position being clear, it is necessary to consider the provisions of section 8 of the Act. Section 8 of the U.P. Sales Tax Act, which has been made applicable in the matter reads as under: "8. Payment and recovery of tax.-(1) The tax admittedly payable shall be deposited within the time prescribed or by the thirty- first day of August, 1975, whichever is later, failing which simple interest at the rate of two per cent (per mensem) or part thereof shall become due and be payable on the unpaid amount with effect from the day immediately following the last date prescribed or with effect from the first day of June, 1975, whichever is later and nothing contained in section 7 shall prevent or have the effect of postponing the liability to pay such interest. Explanation .-For the purposes of this sub-section, the tax admittedly payable means the tax which is payable under this Act on the turnover of sales or, as the case may be, the turnover or purchases, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of other dealers, or such larger amount as the State Government may, by notification, specify in that behalf either in respect of all dealers in any goods or in respect of a particular class of such dealers. (3) Nothing in sub-section (2) shall apply in respect of- (a) the sale by a dealer of goods imported by him from outside Uttar Pradesh, the turnover whereof is liable to tax under sub- section (1) of section 3-A, or (b) the sale by a dealer of- (i) goods imported by him from outside Uttar Pradesh after furnishing to the selling dealer a declaration under sub-section (4) of section 8 of the Central Sales Tax Act, 1956 (Act 74 of 1956); or, as the case may be, (ii) goods purchased or imported by furnishing any declaration or certificate prescribed under any provision of this Act; (iii) goods manufactured by him by using the goods referred to in sub-clause (i) or sub-clause (ii). (4) Where the amount specified in, or notified under, sub- section (2) is altered during an assessment year, the tax payable by a dealer under this section shall be computed as follows: (a) on the turnover relatable to the period prior to such alteration as though the amount specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time prescribed. A distinction has got to be made between the two expressions "tax determined to be payable" and "tax admittedly payable". Section 8 of the Act imposes the liability to deposit the tax determined at the rates prescribed under the Act on the turnover either on sale or purchases, the dealer shall be liable to pay and sub- section (1)(a) of section 8 of the Act provides that the tax assessed shall be deposited within 30 days of the service of notice of assessment and demand, i.e., notice of demand cannot be issued unless the tax has been assessed and liability to deposit will not arise till tax is assessed. When sub-section (1) of section 8 of the Act is being taken into consideration, tax assessed has got to be deposited within 30 days of the service of notice of assessment and demand and sub- section (1) of section 3 of the Act also provides and deals with the situation where there is either enhancement of tax in appeal or revision or where the tax is reduced and in case of enhancement of amount the fresh notice is required to be served but where the amount of tax assessed by the assessing authority is not enhanced as a result of proceedings of appeal or revision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the expression is used "tax admittedly payable", it means the amount of tax which a person admits and the extent to which he admits his liability to pay that amount of tax including the rate on which he admits the tax is payable on his turnover on the basis of which amount of tax is to be quantified. Therefore, if we read the expression "tax admittedly" along with the Explanation it means amount of tax which a person or dealer on the basis of the rate admitted by him on the admitted turnover of his sale or purchase, admits to be payable. It is in respect of that amount section 8(1) of the Act imposes the liability to deposit that amount within the prescribed time even if there has been no final determination of the tax or the amount of tax or the rate at which it is to be determined is yet in dispute. I am unable to accept the contention of the learned Standing Counsel that the expression "tax admittedly payable" used in section 8(1) of the Act means the amount of tax determined at the rates at which the Government department claims on the turnover submitted by the dealer. This will run counter to the letter and the spirit of section 3 as well as section 8(1) of the Act. This s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a dispute simpliciter before the Supreme Court that aluminium rolled and extrusion sheets were also covered or not covered by entry metal alloys. It cannot be said that the dispute was not bona fide one particularly when the appeal has been admitted. It was argued at length and decided by the apex Court by its judgment delivered in August 1981 while hearing had finished in September 1979, so there was a bona fide dispute regarding rate of tax of aluminium rolled and extrusion sheets and the quantum of tax payable under the Act, i.e., the tax at the rate of 2 per cent on that item has also been deposited, which according to the dealer was payable. The disputed figure related to the amount of tax based on the dispute regarding the applicability of a particular entry for determination of the quantum of tax. In such circumstances, even if the appeal has been dismissed by the Supreme Court but as regards the said question and as regards the difference of the quantum of tax there was a dispute and the said quantum of tax could not be taken or the difference to be the tax admittedly payable by the dealer. It might be tax finally determined and assessed by the apex Court with reference t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he dealer and this section indicates that out of the amount of tax admittedly payable if the same either in part or in whole is not deposited in time the liability of interest will arise in regard to that amount. This leads one to the only conclusion that any amount of tax in regard to which there is a dispute, be it on account of the dispute particular and dispute regarding applicability of the entry and the rate or otherwise under law the interest will not be payable. Nowhere this section discloses any such thing as bona fide or mala fide dispute and, therefore, the question of bona fide and mala fide is irrelevant. If there has been a dispute as in the present case with reference to the applicability of the entry under which the item in question was covered which dispute had been decided by the Supreme Court finally as mentioned earlier after long debate, the dispute did exist and therefore, the dealer could not be subjected to imposition of interest. It is another thing that as a matter of precaution the dealer might have realised the tax but that is not relevant at this juncture because the section does not provide any such thing as bona fide dispute. This had been the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of tax be it based on the question relating to appropriate rate of tax or the applicability of the entry of the item wherein the rate has to be determined. If there is a dispute regarding the extent of liability to pay tax as mentioned above and if the dealer deposits the amount of tax admitted by him to be payable and to the extent of his admitted liability on the basis of entry admitted by him to be applicable denoting the entry of the goods and rate no liability for amount of tax unpaid which is subject-matter of dispute will arise or stand fastened on the dealer for the period till the dispute is finally resolved. Thus, in my view, the question of bona fide or mala fide had not been relevant. As regards the second contention raised on behalf of the Commissioner, Sales Tax, in these Revision Nos. 1 to 11 appeals were not maintainable and the said appeals had illegally been entertained, in my opinion, there is no substance in the said contention. Section 9 of the U.P. Sales Tax Act provides: "9. Appeal. -Any dealer or other person aggrieved by an order made by the assessing authority, other than an order mentioned in section 10-A, may, within thirty days from the date of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f revisions are made easy. 9.. Let the copy of this order be placed on the record of each revision. The Department preferred appeals to the Supreme Court. R.C. Verma, C. Siddharth and R.B. Misra, Advocates, for the appellant. Dipankar Gupta and Bharat Aggarwal, Senior Advocates [D. Aggarwal, Ms. Purnima Singh and Suman J. Khaitan (for M/s. Khaitan Co.) Advocates, with them], for the respondent. JUDGMENT Section 8 of the U.P. Sales Tax Act, 1948 so far as it is relevant, reads thus: "Section 8. Payment and recovery of tax.-(1) The tax admittedly payable shall be deposited within the time prescribed or by the thirty first day of August, 1975, whichever is later failing which simple interest at the rate of two per cent per mensem shall become due and be payable on the unpaid amount with effect from the day immediately following the last date prescribed till the date of payment of such amount and nothing contained in section 7 shall prevent or have the effect of postponing the liability to pay such interest. Explanation .-For the purposes of this sub-section, the tax admittedly payable means the tax which is payable under this Act on the turnover of sales o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of section 8. Sub-section (1) thereof requires the assessee to deposit within the time prescribed or by 31st August, 1975, whichever is later, the tax that is admittedly payable by him. What "tax admittedly payable" means, for the purpose, is set out in the Explanation to sub-section (1). It means the tax payable under the Act on the assessee's turnover as disclosed in his accounts or as admitted by him in his return or other proceeding under the Act, whichever is greater, or, if no accounts are maintained, according to his estimate. Sub-section (1-A) deals with the post-assessment scenario. It says that the tax assessed under the Act shall be deposited within 30 days of service of notice of assessment and demand. Sub-section (1-B) applies if the tax assessed is not deposited as required by sub- section (1-A). 5.. The dispute here, as aforestated, was in regard to the classification of the assessee's products. Such classification dispute is ordinarily resolved in assessment proceedings and, if resolved against the assessee, the assessee has to make payment of the differential amount of tax as required by sub-section (1-A) failing which the provisions of sub-section (1-B ..... X X X X Extracts X X X X X X X X Extracts X X X X
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