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TMI Blog1989 (7) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... ax by a dealer if the aggregate gross turnover exceeds Rs. 50 lakhs during any year. The applicants moved writ petitions under article 226 of the Constitution challenging the legality and validity of the imposition of turnover tax on the grounds that the imposition and collection of turnover tax violates articles 14, 19 and 300A of the Constitution of India. Eventually, rules issued in the said writ applications were discharged with certain directions. The applicants being aggrieved with the said orders, preferred appeals and a number of such appeals came up for hearing before a Division Bench and by an order dated February 24, 1988* the appeals were dismissed. The imposition of turnover tax was found to be valid and not unconstitutional. 3.. The applicants' case is that they being dealers registered under the 1941 Act and the Central Act, are entitled to purchase goods at a concessional rate of tax provided they issued necessary declaration forms to their sellers. Such declaration forms are issued by respondent No. 1 provided all the conditions laid down in rule 27AA of the Bengal Sales Tax Rules, 1941, are complied with. Up to September, 1988, the declaration forms were being r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lenge to the constitutionality of the imposition of turnover tax. The second point is urged mainly on the ground that uptill the time of the disposal of the appeal, the applicants were injuncted from making the payment. 7.. For a proper appreciation of the first point urged on behalf of the applicants, it may be convenient to bear in mind the provisions of section 10A which came into force with effect from October 1, 1983. The provisions are as follows: "10A. Interest payable by dealer.-(1) Where a registered or certified dealer furnishes a return referred to in section 10 in respect of any period by the prescribed date or thereafter, but fails to make full payment of tax payable in respect of such period by such prescribed date, he shall pay a simple interest at the rate of two per centum for each English calendar month of default from the first day of such month next following the prescribed date up to the month preceding the month of full payment of such tax or up to the month prior to the month of assessment under section 11 in respect of such period, whichever is earlier, upon so much of the amount of tax payable by him according to such return as remains unpaid at the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." 8.. Now the contention of the applicants is that since the applicants had filed their returns and had paid tax according to such return, subsection (1) is not attracted. It is then contended that sub-section (2) contemplates the case of a dealer who fails to furnish a return referred to in section 10, and, therefore, not applicable to these cases. Subsection (3) speaks of payment after assessment and admittedly is not attracted to these cases. 9.. Mr. Bhattacharya argued that the applicants being registered or certified dealers and having furnished their returns periodically as contemplated in section 10 of the Act and having paid the tax according to such return, it could not be said that any amount of tax payable was remaining unpaid according to the return, and as such, the question of imposition of interest on so much of the amount that remains unpaid could never arise. In this connection, our attention was drawn to sub-rule (2)(c) of rule 27AA of the Bengal Sales Tax Rules, 1941. The said rule provides that if the applicant at the time of making application for declaration forms defaulted in furnishing any return or returns, together with the receipted challans showing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is specifically mentioned in the section itself. The learned State Representative, on the other hand, argued that a taxation statute usually contains two parts, namely, charging section and machinery provisions. In support of this contention reliance was placed on the decision in the case of Haji Lal Mohd. Biri Works v. State of U.P. reported in [1973] 32 STC 496 (SC). There is an observation in this case that the provision for imposition of interest was apparently added with a view to tightening up the machinery for collection of sales tax and as a deterrent measure so that the dealers may not evade or delay the payment of tax. This was of course a case arising out of section 8(1-A) of the U.P. Sales Tax Act, 1948. The section provides for recovery of interest on tax remaining unpaid for a specified period after the notice of assessment. Obviously, it contemplates a case of post-assessment demand for interest. But what is important is the observation that the provision is a machinery provision as distinguished from a charging provision, meant to ensure payment of tax in due time. 11.. In the case of Commissioner of Income-tax v. National Taj Traders, reported in [1980] 121 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onourable judges of the Supreme Court have quoted with approval a rule of construction of taxation statutes, as has been stated by Rowlatt, J. in Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 1 KB 64, as follows: "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." Upon a reading of the whole judgment it appears that their Lordships held that the subject is not to be taxed unless the charging provision clearly imposes obligation. Their Lordships thereafter upon a close scrutiny of the provisions, observed that the language used fits in clearly within the scheme of entire section. Therefore, what is important to see is whether the language used is consistent with the scheme of the Act and the interpretation to be put to the language should be such as renders the section workable and meaningful. 14.. It is true that the word "complete" is not there in section 10A(1) of the Bengal Finance (Sales Tax) Act, 1941. But unless the expression "return", as us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r should not be issued, the only point for consideration is whether returns have been submitted and forms issued have been used in a bonafide manner. The question whether the return was a complete one or not in view of some amendments in the Act itself, as envisaged by section 6B, did not fall for consideration in that case. We have considered that aspect of the matter and we are of the view that this decision can have no direct application to the facts of the case before us. Rule 27AA(2)(c) contemplates, besides payment of tax, surcharge and additional surcharge, various other safeguards and also contemplates granting of instalments. In the context of such provisions the aforesaid decision was rendered. 19.. Admittedly, the applicants did not file any return with regard to the turnover tax. It was submitted that since writ petitions challenging the validity of section 6B were pending and there was an interim order issued by the High Court restraining the respondents from realising the same, though upon furnishing security by way of bank guarantee, the applicants could not have shown the amount of turnover tax in the returns. Whether the respondents could, in view of the injuncti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TC 466. It was a decision given by a Bench of three judges of the Honourable Supreme Court. The majority view was dissented from by Mr. P.N. Bhagwati, J. who preferred to rely on an earlier decision rendered by a Bench of five judges reported in [1965] 16 STC 318 (State of Rajasthan v. Ghasilal). In the case reported in [1981] 48 STC 466 (SC) (Associated Cement Co. Ltd. v. Commercial Tax Officer), the assessee submitted returns under the Rajasthan Sales Tax Act, 1954, accompanied by challans which were in accordance with the return. In the challans freight charges were not included in the bona fide belief that freight charges were not liable to be included in the taxable turnover in view of the pendency of a question raised in that behalf and then pending before the Supreme Court. After the judgment, however, the assessee submitted revised returns. It was held that the liability to pay interest was clearly attracted. Mr. Bhattacharya, appearing on behalf of the applicants, preferred to rely on the decision of the larger Bench reported in [1965] 16 STC 318 (SC) (State of Rajasthan v. Ghasilal). In that case it was observed that section 3 of the Rajasthan Sales Tax Act, 1954, which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecisely, it was held that operation of the stay order does not prevent the running of time. In the case of Haji Lal Mohd. [1973] 32 STC 496 referred to earlier, the Supreme Court also has observed that there is nothing in section 8(1A) of the U.P. Sales Tax Act to prevent the running of interest because of the operation of any stay order. The liability to pay interest is created by the statute and not by the judgment. Consequently, the contention that the interest may, if at all, be claimed from February 24, 1988, on which date the appeals were disposed of, cannot therefore, be accepted. To accept such a position would only encourage dilatory tactics on the part of those who are likely to benefit from the delay in the disposal of cases and lifting of prohibitory orders. Such an interpretation would not only be against law but against public policy as well. We have already indicated that a party obtaining a stay order at his own choice does so at his own risk. The liability to pay interest accrued from October 1, 1983, and has become payable with effect from that date irrespective of the date of disposal of the appeals. 23.. Besides denying the liability to pay interest the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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