9911796707
TMI Blog1997 (9) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... this assessment an appeal was preferred by the applicant who also made an application for stay of realization of the entire disputed amount. The stay application was allowed by an order dated 5th March, 1993 on condition that the applicant deposit a sum of Rs. 3,50,000 by March 30, 1993. This amount was deposited by the applicant in compliance with the order dated March 5, 1993, on March 26, 1993. By an order dated August 23, 1996, the appeal was partially allowed. The said order with form 26 dated September 6, 1996 was forwarded to the applicant. The applicant received an order dated October 4, 1996 from the respondent No. 1 giving effect to the appellate order. In this order dated October 4, 1996, the respondent No. 1 determined the tax payable in pursuance of the appellate order at Rs. 52,69,114. He determined the balance tax payable at Rs. 2,43,308 for which form No. XXVIII was directed to be issued. It was also held by the respondent No. 1 in the order dated October 4, 1996 that the applicant was liable to pay interest under section 10A(4) of the 1941 Act for forty-three months on and from March 1993 amounting to Rs. 2,09,238 for which a notice in form VII-L was directed to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to pay interest under section 8A(4) of the 1954 Act for forty-three months on and from March, 1993 and the total amount of interest was determined to be Rs. 8,59,140. It was directed that a notice in form VII-H was to be issued. Both the forms, viz., form XV dated October 8, 1996 for Rs. 9,99,021 and form VII-H dated October 8, 1996 for Rs. 8,59,140 were received by the applicant on November 4, 1996. The applicant has approached the Tribunal against determination of interest on assessed tax under section 10A(4) of the 1941 Act in case No. RN-236 of 1996 and under section 8A(4) of the 1954 Act in case No. RN-237 of 1996. 5.. Mr. Pal, learned advocate for the applicant, argued that the demand of interest for forty-three months is not legally valid because the interest should be calculated from the date of the order in appeal. When an appeal is filed, it is a continuation of the assessment proceeding. In this connection, he referred to the observation of the Supreme Court in the case of Hasmat Rai v. Raghunath Prasad AIR 1981 SC 1711 where it has been held that an appeal is a continuation of a suit. When the initial assessment is modified in appeal, the original demand goes an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the order of the appellate authority which in turn merges in the order of the revising authority, and the tax which the assessee is required to pay, is the tax as finally assessed after appeal and revision as the case may be. Therefore, when there is a variation in the amount of tax as a result of appeal or revision, a fresh notice of demand should be served on the assessee and it is only when the assessee fails to comply with such a notice of demand that he becomes a defaulter and becomes liable to recovery proceedings and of penalty and interest, etc. In support of his submission, Mr. Pal relied upon the decision in the case of Firm Parshuram Rameshwar Lal v. State of Uttar Pradesh [1974] 33 STC 540 (All.). 7.. Mr. Pal further argued that the applicant had applied for an order of stay which was granted under the condition that the applicant was to deposit a certain amount of money. The applicant did deposit the amount within the prescribed date and thereafter the operation of the order of assessment was stayed. Hence, the applicant is not required to pay interest for the period of this stay. In support of his argument Mr. Pal cited the case of M.L. Shroff & Co. v. Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect interpretation. Section 20 of the 1941 Act makes it very clear that the appellate authority, in disposing of any appeal under sub-section (1) may confirm, reduce, enhance or annul the assessment. It may set aside the assessment and direct the assessing authority to make a fresh assessment after such further enquiry as may be directed. It may set aside any part or parts of an assessment and if it does so, the assessing authority will make fresh assessment in respect of such part or parts only, the remaining part or parts of the previous assessment remaining valid. Similar provisions are found in section 12(1A) and (1B) of the 1954 Act. It would, therefore, be clear that section 10A(4) of the 1941 Act does not refer to reduction in assessment alone. Similarly, section 8A(4) of the 1954 Act also does not refer to reduction alone. Both the sections refer to modification and by way of modification the appellate authority is at liberty to reduce, enhance or annul the assessment made. In view of this and considering the provisions in section 10A(3) and 10A(4) of the 1941 Act and sections 8A(3) and 8A(4) of 1954 Act there is no basis for the contention of the applicant that whenever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In case of modification by appeal, only the amount to be paid and not the date of payment is modified. In the instant case the assessment was only modified and was not set aside. 11.. That notice in form XXVIII is a mere intimation and not a separate demand notice will be clear from the fact that a notice under form XXVIII is issued even under the provision of rule 56A(1) which is nothing but an intimation to the Collector so that the Collector can take steps for recovery of the amount as modified, enhanced or reduced. It will be seen from appellate order in RN-236 of 1996 that the assessment order has merely been modified. The appellate authority has mentioned categorically that regarding the rate of tax applicable to the balance of turnover, he was not in a position to interfere with the order passed by the learned assessing authority. He has also mentioned that excepting the changes ordered by the appellate authority, no other changes in respect of the balance of turnover taxable at 4 per cent or 8 per cent should be made and the assessing authority was directed to make computation of tax on the basis of the modifications indicated by the appellate authority and issue demand n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said notice, .......and shall be added to the amount of tax and be deemed for all purposes to be part of the tax: Provided that where as a result of appeal, revision or reference or of any other order of a competent court or authority, the amount of tax is varied, the interest shall be recalculated accordingly: Provided further that the interest on the excess amount of tax payable under an order of enhancement shall run from the date of such order if such excess remains unpaid for six months after the order." It would be seen that the second proviso in the sub-section (1-A) clearly specifies that in cases of an order of enhancement the excess amount of tax payable under such order shall run from the date of such order if such excess remains unpaid for six months after the order. This is a provision which is not at all similar to the provisions in the 1941 Act or 1954 Act. 14.. Mr. Pal has cited the decision reported in Income-tax Officer, Kolar Circle v. Seghu Buchiah Setty [1964] 52 ITR 538 (SC) in support of his contention that on the amount of tax assessed being reduced as a result of the appellate orders, a fresh demand notice had to be served on the respondent before he c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different as would be clear from the following extract from paragraph 19 of that judgment: "The facts of the case clearly indicate that the applicant while submitting the return, indicated the tax but claimed exemption in view of the stay order permitting the applicant to file its returns and pay tax in the said manner. It is also significant to note that at the time when the returns were submitted, the decision of the trial Judge quashing the notification held the field. It is not a case where it can be said that the applicant did not submit a correct return or that the applicant failed to submit a return." The Tribunal in that case distinguished the facts of the case from the facts in the case of Kingsway and Co. [1990] 76 STC 119 (WBTT) and noted that: "In the present case, however, the facts are different in the sense that the returns submitted by the applicant could not be said to be incomplete far less that there was no return. It is true that it had not paid the tax as per the return but it did so under the authority of the interim order passed by the High Court which permitted the applicant to submit its return in that manner and then claim exemption from the payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion would be only a section of the cases considered under these provisions. The words "if any" would be totally redundant if the provision referred exclusively to cases of reduction in the amount of tax payable, as contended by Mr. Pal. 17.. Mr. Pal has argued that the applicant submitted a stay application which was granted conditionally. When the amounts specified in the conditional stay order was paid, the applicant was not required to pay for the period of stay. However, stay of the operations of the assessment order is not statutorily automatic on appeal. It is the decision of the applicant that he would like to have a stay of the operations of the order. On the grant of a stay order the demand is not extinguished and it is the conscious decision of the applicant that if the appeal fails, he will be required to pay the amount recovered by the assessment order. Of course, in case the appeal succeeds wholly and the assessment order is set aside, there is no liability on the party but the stay order does not result in extinction of the demand. The demand is not allowed to be collected, at the instance of the applicant and on the fulfilment of the required conditions by the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 1941 Act provides that "where a dealer fails to make payment of any tax payable after assessment by the date specified in the notice issued under sub-section (3) of section 11 for payment thereof, he shall pay a simple interest at the rate of 2 per centum for each English calendar month of default from the first day of the month next following the date specified in such notice to the month preceding the month of full payment of such tax or up to the month preceding the month of commencement of proceedings under sub-section (4) of section 11, whichever is earlier, upon so much of the amount of tax payable by him according to such notice as remains unpaid at the end of each such month of default" (portion underlined* by us for emphasis). Section 10A(4) of the 1941 Act thereafter specifies that where, as a result of an order under section 20 or section 21, the amount of tax payable is modified, the interest payable under sub-section (3) of this section or sub-section (6) of section 10F, as the case may be, shall be determined or re-determined on the basis of such modified amount and the excess interest paid, if any, shall be refunded. It would, therefore, be clear that the scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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