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TMI Blog1996 (2) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... x has to be paid along with interest at such rate as may be prescribed. The petitioner says that the abovesaid two provisions were inserted by Act 24 of 1984 with effect from January 1, 1984. But rule 20-A prescribing the rate of interest at Rs. 2 for every one hundred rupees or part thereof was inserted by G.O. Ms. No. 894, Revenue(S) dated July 25, 1985 and was published in the Gazette on August 1, 1985. As such there was no rule, prescribing the rate of interest, in force during the period between September 27, 1984 and December 19, 1985, during which period the petitioner made delayed payments of tax. It appears that the Accountant-General, Audit Party took objection with regard to non-payment of the interest on the belated payment that led the respondents to issue show cause notice to the petitioner on January 20, 1987 calling upon it to explain as to why interest of Rs. 31,710.66, should not be levied for belated remittances of entertainment tax. The petitioner submitted its explanation to the said notice. On consideration of the same, the respondent passed orders dated April 25, 1987 demanding the said amount of Rs. 31,710.66 as interest for belated payment of entertainment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rupee for every hundred rupees or part thereof of such amount for each month or part thereof after the date specified for its payment, there was no prescribed rate of interest under the newly inserted sections 5(8) and 10(1) of the Act which alone were in force during the relevant period. He contends that insertion of rule 20-A from August 1, 1985 would not clothe the authorities power to levy interest for the earlier period as the rule has not been brought into effect retrospectively. 5.. The learned Government Pleader for Commercial Taxes, on the other hand, contends that the liability to pay interest was in existence before March 31, 1984 as also after that date, therefore the petitioner cannot escape payment of interest on the ground that the rate of interest was prescribed a little later by rule 20-A. Even though rule 20-A does not specifically say that it has come into force from January 1, 1984, having regard to the nature of the provisions, it would be deemed that it has come into force from January 1, 1984 and therefore levy of interest is quite justifiable. 6.. On the above submissions, the short question that arises for consideration is whether under rule 20-A, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0(1) with effect from January 1, 1984. The term "prescribed" is defined by section 3(8) of the Act to mean-prescribed by rules made under this Act. Section 16 of the Act authorises the State Government to make rules for securing the payment of the entertainment tax and generally for carrying into effect the purposes of this Act. Sub-section (2-A) of section 16 which was also inserted by Act 24 of 1984 and which came into force from January 1, 1984 reads thus: "(2-A) Any rule made under this Act may be made so as to have retrospective effect." 9.. Thus, it is obvious that the Government have power to frame rules with retrospective effect. 10.. Now, we shall refer to rule 20-A which has been inserted by notification issued in G.O. Ms. No. 894, Revenue, dated July 25, 1985 and which was published in the Gazette on August 1, 1985. The said rule reads as follows: "20-A. Interest on tax or penalty, if not paid by proprietor in time.-If the proprietor fails to pay the amount of tax, payable as required under section 4 or 4-A or 5 of the Act on the due date or if the tax assessed or penalty levied is not paid by any proprietor within the specified time therefor in the notice of dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te as it stands and in case of doubt it shall interpret it in a manner favourable to the taxpayer. In considering a taxing Act the court is not justified in straining the language in order to hold a subject liable to tax." 12.. The principle laid down above, in our view, has no application to the facts of this case. As already pointed out above, the liability to pay interest on delayed payment of tax existed before the Amendment Act 24 of 1984. By this Act, the Government was empowered to make the rules retrospectively ; the language of the amended rule, namely, rule 20-A clearly states that the interest can be levied from the date or dates specified for its payment. 13.. In Income-tax Officer, Alleppey v. M.C. Ponnoose [1970] 75 ITR 174 (SC) ; AIR 1970 SC 385 it was urged before the Supreme Court that the State Government can invest the Tahsildar with the powers of a Tax Recovery Officer retrospectively. There, the Tahsildar attached properties subsequent to April 1, 1962, i.e., after the commencement of Income-tax Act, 1961, but before the date of notification empowering the Tahsildar to act as Tax Recovery Officer. The action of the Tahsildar in attaching the properties was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the officers appointed under rule 26-A which came into effect from July 1, 1976, reassess for any period prior to July 1, 1976. In the absence of any clear words, from which necessary implication would follow, in section 16, which is the section which empowers the State Government to make rules, it was not open to the State Government to make rules, which would have retrospective effect. This and the Yemmiganur Spinning Mills case [1976] 37 STC 314 (AP) were decided before sub-section (2-A) was inserted in section 16 of the Act. After insertion of sub-section (2-A), which empowers the State Government to frame rules by Act 24 of 1984 with effect from January 1, 1984, the Government has power to make rules which have retrospective effect and therefore these judgments have no application. 16.. In Nagarathinam Ammal v. Deputy Commercial Tax Officer [1987] 67 STC 464 a Division Bench of the Madras High Court dealt with the assessability of interest on penalty and delayed payment of tax. In that case, the demand of tax was made pursuant to the original order of assessment. That demand was already complied with. Later, a further demand was raised as penalty due in respect of the same ..... X X X X Extracts X X X X X X X X Extracts X X X X
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