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TMI Blog1998 (3) TMI 656X X X X Extracts X X X X X X X X Extracts X X X X ..... w that kachcha naryal is a fresh fruit and its turnover was exempt from tax under Notification No. ST. 911-X, dated March 31, 1956. While referring to the above decision, the Commissioner of Sales Tax, U.P., issued a Circular No. Vidhi-1(1)-(0-1)-87-883017/Mukhyalaya, dated December 28, 1987 annexure-1 to the revision, that as kachcha naryal has been held to be a fresh fruit, the "coconut with husk" if comes under that category, it should also be exempted from tax treating it as a fresh fruit. The circular also stated that it is a question of fact whether "coconut with husk" is sold by the vegetable vendors for use as vegetable and consequently, in terms of the decision aforesaid, coconut with husk is exempt from tax. Subsequently, in P.A. Thillai Chidambara Nadar v. Additional Appellate Assistant Commissioner, Madurai [1985] 60 STC 80 (SC); 1985 UPTC 1141, a case arising under the Tamil Nadu General Sales Tax Act, 1959, the Supreme Court took a different view that ripened or coconut with husk is neither "fresh fruit" nor "vegetable" so as to earn exemption from levy of tax. Because of the decision of the Supreme Court, the Commissioner of Sales Tax, U.P., issued another circul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncerned with them. It may be observed that the assessee challenged the validity of proceedings under section 22 of the Act and also its liability to pay interest. The case taken by the assessee however, did not find favour with the assessing authority and by two separate orders passed under section 22 the assessing authority rectified the assessment orders for the years in question and levied an interest of Rs. 3,584 for the period December 15, 1988 to March 31, 1989 in respect of the assessment year 1988-89 and Rs. 3,461.75 for the assessment year 1989-90. The orders of rectification were also upheld in appeals successively, first by the Assistant Commissioner (Judicial), Sales Tax, and thereafter on second appeal by the Sales Tax Tribunal. Feeling still aggrieved, these revisions have been preferred by the assessee. 6.. At this stage, it would be appropriate to set out the relevant provisions having a bearing on the controversy in issue. Section 8: 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 8(1-c) of the Act further indicates that the interest payable, inter alia, under sub-section (1) shall be added to the amount of tax and shall also be deemed for all purposes to be part of the tax. The provisions referred to above, are apparently intended to tighten up the machinery for collection of sales tax (trade tax) as a deterrent so that the dealers not evade or delay payment of tax admittedly payable under the Act. 8.. In Central Provinces Manganese Ore Co. Ltd. v. Commissioner of Income-tax [1986] 160 ITR 961 the Supreme Court was dealing with the provisions of Income-tax Act and Rules relating to levy of interest under sections 139 and 215 of the Income-tax Act where it was observed as under: ...........Income-tax Act makes a clear distinction between the levy of a penalty and other levies under that statute. Interest is levied under sub-section (8) of section 139 and under section 215 because, by reason of the omission or default mentioned in the relevant provision, the Revenue is deprived of the benefit of the tax for the period during which it has remained unpaid. The very period for which interest is levied under the relevant provision points to the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the rate of interest being so high no dealer shall dare take risk for the fun of it. In taking this view we think that the legislative intention of levying interest on those dealers who deliberately omit to deposit the tax payable is effectuated. It also safeguards the interest of honest dealers......... 11.. Learned counsel for the revisionist contended that both on facts and law the tax authorities including the Sales Tax Tribunal erred in sustaining the levy of interest. It was contended that for the purposes of determining the liability to pay interest under section 8(1) of the Act the state of affairs which existed at the material time and the conduct of the assessee in not depositing the tax liability within time were not properly appreciated. It was urged that the cause of action for paying interest is the default in payment of tax admittedly payable and the interest cannot be levied uniformly like a penalty in all cases of default, whether bona fide or otherwise. Further, the provisions regarding imposition of interest are to be construed within the terms and language of the statute and interpreted as it stands. In continuation, the learned counsel urged that coconu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the record from which it is supposed to emanate are discerned. However, a mistake apparent on the record must be obvious and a patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. 14.. In the present case, as already stated, there was a serious dispute as to whether under the relevant provisions of law for submission of return or for non-payment of tax admittedly payable on facts and in the circumstances of the case, the interest started accruing or not on the unpaid amount of tax within the prescribed period. According to the assessee even after the circular dated December 15, 1988 was issued the legal position about the taxability of coconut with husk was not very clear. The assessing authority himself took no action pursuant to the said circular for the matter was still under consideration of the Government and it was after about two years that by the circular dated January 4, 1990 the position was clarified when the assessments were made on September 27, 1990. The levy of interest was made still later by rectification orders which were made on January 23, 1992. 15.. The arg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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