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TMI Blog1989 (9) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to as the "Central Act"). The Excise and Taxation Officer-cum-Assessing Authority, Kaithal, (respondent No. 2) created demand of Rs. 1,31,455 on the petitioner-firm vide order dated May 10, 1980. The petitioner appealed to the Deputy Excise and Taxation Commissioner (Appeals), Ambala. He stayed the recovery of penalty in terms of proviso to sub-section (5) of section 39 of the Act. The appeal, was, however, dismissed on March 31, 1983, by the Joint Excise and Taxation Commissioner, Ambala. Aggrieved, the petitioner filed a second appeal before the Sales Tax Tribunal, Haryana, Chandigarh, under sub-section (2) of section 39 of the Act. The petitioner filed an application for entertainment of appeal without prior payment of the amount of penalty and also prayed for stay of recovery of the said amount of penalty. The learned Sales Tax Tribunal entertained the appeal and granted stay of the amount of penalty under sub-sections (5) and (6) of section 39 of the Act. Ultimately, the second appeal was also dismissed by the Tribunal on May 20, 1987. The interim stay order, thus, stood vacated. The petitioner made an application under section 42 of the Act to the Sales Tax Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... faithfully the purchases of paddy, thus resulting in less payment of Rs. 65,000 as purchase tax. A penalty of Rs. 1,31,455 was imposed on the petitioner vide order dated May 10, 1980. The factum of filing of the first and second appeals and the review application is admitted. It is averred that even after the rejection of its appeal, the petitioner failed to make payment of Rs. 1,31,455 immediately and had to be reminded to do the same. The petitioner had obtained stay order in respect of the aforesaid amount of penalty and incurred the liability to pay interest as per provisions of section 59 of the Act. It was averred that since the petitioner had failed to deposit the amount of penalty even after the decision of the Tribunal, it exposed itself to a penalty of a sum not exceeding 25 per cent of the amount due from it. It was explained that detailed particulars of statutory notice in form ST-27 to pay interest under section 59 of the Act could not be given due to a clerical mistake. However, in response to the notice, the petitioner appeared before the Assessing Authority and was confronted with the facts of the case and also its liability for penalty under section 30 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st right from the date the tax or penalty first became due even in case where the order of stay was granted by the High Court or the Supreme Court and charging of interest even for the period for which the stay order was in operation, is illegal. It was further contended that it tantamounts to putting restrictions on the powers of the High Court or the Supreme Court, to grant relief to the citizens. No restrictions on their powers could be put by the State Legislature. To that extent, section 59 of the Act is ultra wires the powers of the State Legislature enshrined in entry 54 of List 11 of the Seventh Schedule to the Constitution. It was urged that the action of respondent No. 2 in charging interest under section 59 of the Act is without jurisdiction, because interest could be charged only on the amount ultimately found due. The matter is still sub judice inasmuch as the reference under section 42 against the order of imposition of penalty is still pending and that will only become final on the decision of the said reference by this Court or the Supreme Court. Till then, the amount of penalty cannot be said to have been ultimately found due. The charging of interest on the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nequality of treatment does not per so amount to discrimination within the inhibition of equal protection of laws. To attract the operation of the clause, it is necessary to show that the differentiation is unreasonable or arbitrary or that it does not rest on any rational basis having regard to the object which the legislature has in view. It is well-settled that equal protection provided by article 14 does not insist that the legislative classification should be scientifically perfect or logically complete. The legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is defined to be clearest. If the law is not discriminatory with its sphere of operation, it does not become invalid because it is not all embracing and that it is limited as to territory, persons or objects to which it is to be applied or the evil to be remedied. The Supreme Court has formulated two tests which must be satisfied in order that the classification made by a legislature may be upheld by the court as reasonable classification coinciding with the guarantee of equal protection in article 14: (i) That the classification must be founded on intelligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollection of revenue. These provisions are not meant for the benefit of defaulting tax-payers and such defaulters cannot claim that the amount of interest payable by them on tax payment should be scaled down as if they were entitled to claim relief under a debt relief law. The impugned provisions have been enacted to ensure that the amount of tax which is due is paid by the prescribed time. However, in the case of tax deposited in excess, these considerations are not present. A tax collected in excess remains with the State; the money is not utilised by an individual for personal benefit. No provision is necessary for coercing the State to refund the amount of tax collected in excess of what was legally due. Rule 35 provides that on the determination by a competent authority that the tax has been collected in excess, the authorities are ordered to refund the tax. If the same is not done, then interest is payable on the amount remaining due after it has been held to be so. Even otherwise, the State forms a class in itself. It cannot be said that the State when it collects a tax also falls within the category of dealers. The tax is collected in exercise of the sovereign powers of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions on the plea of violation of article 14. We are not impressed by the second submission of Mr. Sawhney. The interest on the arrears of tax which are not paid by the prescribed time accrues automatically by operation of law. Even if the authorities under the Act, the High Court or the Supreme Court, in proceedings pending before them, stay the recovery of tax, that does not absolve the dealer, in the case of failure of the proceedings, to pay interest on the arrears of tax. This point stands concluded by the decision of the final Court in Haji Lal Mohd. Biri Works v. State of U.P. [1973] 32 STC 496, wherein it was held: "Argument has also been advanced by Mr. Sen that the interest on arrears of sales tax could not be realised for the period during which the recovery of sales tax was stayed. We find it difficult to accede to this contention because there is nothing in the language of section 8(1-A) of the Act which prevents the running of interest because of the operation of any stay order. Indeed, the liability to pay interest is created by the statute and the Sales Tax Officer has no discretion to grant any exemption from the payment of interest." The third submission o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of A.P. [1979] 43 STC 510, wherein it was observed: "The words 'during the year' in section 15(1) of the Andhra Pradesh General Sales Tax Act, 1957, are not to be understood as 'within the year' but refer only to the instalments payable on the basis of the monthly estimated or actual turnover. There is nothing in the language of section 15, which prohibits the assessing authority from making a provisional assessment on the monthly returns beyond the 31st day of March of the year. The fact that it is open to the assessing authority to make a final assessment on the basis of the returns submitted in form A-2 does not in any way preclude him from making provisional assessment even after the expiry of the 31st day of March. Therefore, no distinction can be drawn between provisional assessments made within the year and provisional assessments made beyond the year for the purpose of collecting interest in accordance with the terms of section 16(3). As the liability to pay interest under section 16(3) is automatic and arises by operation of law the assessing authority is not under an obligation to issue a show cause notice before levying interest on the tax assessed. Similarly, if ..... X X X X Extracts X X X X X X X X Extracts X X X X
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