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TMI Blog2001 (8) TMI 1337X X X X Extracts X X X X X X X X Extracts X X X X ..... is not refunded within 90 days from the date of the order. It has no reference to the date of deposit of tax. Proviso to section 22 also contemplates that no interest is to be paid if the refund arises because of the appeal order and no direction to that effect could be given. It is also stated that, if an appeal is filed before the Tribunal under section 22 of the Act, the Tribunal is not competent to grant stay in second appeal, and even in the revisional jurisdiction, the High Court has no power to grant stay and the amount so recovered from an assessee ultimately found refundable without any interest. The disposal of the appeals and revisions takes number of years. Charging the penalty under section 13(2)(ii) at 24 per cent for the first three months and 30 per cent for the period thereafter is discriminatory. Reliance is placed on the judgment given in the case of Khazan Chand v. State of Jammu and Kashmir [1984] 56 STC 214 (SC), wherein, the provisions were upheld, because, the same rate of interest was made applicable by Jammu and Kashmir Sales Tax Act, for default. Since in the present matter, the rate of interest is at variance, the provisions are arbitrary and hit by art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was no default in the payment of tax and, therefore, the period during which stay was imposed should be excluded in calculating the interest. It is also contended that the imposition of interest at 24 per cent for the first three months and 30 per cent thereafter is discriminatory and violative of article 14 of the Constitution for the reason that in case of refund to the assessee, the interest is payable only at the rate of 12 per cent under section 13-A of the Act. Both the contentions were rejected by the learned single Judge. In this appeal, the learned counsel for the appellant has laid stress on the first point. As regards the first point, the learned single Judge observed that: "The provisions of section 13 contemplates a default in not making the payment of tax due under the Act. The default continues even when the stay is granted by a competent authority. It is only the operation of that order which is temporarily stayed. If, ultimately, the appeal/revision or writ is accepted, the position may be different. Otherwise, the result would be that, the action under section 13(2)(ii) would be taken even in a case where the demand was under stay." 2.. The learned coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as if it were a fine imposed by him; Provided that where a dealer or other person who has appealed or applied for revision of any order made under this Act and has complied with an order made by the appellate or the revising authority in regard to the payment of the tax or other amount, no proceeding for recovery under this sub-section shall be taken or continued until the disposal of such appeal or application for revision. (4) ........." 4.. The sine qua non for levying penalty under section 13(2)(ii) is the default in making payment of tax as per sub-section (1). When the stay order is in force and the collection of tax is kept under a spell of suspension, no default can be said to have been made by the assessee in the payment of tax as per the demand notice. This is the view taken in the recent judgment of the Supreme Court in Consolidated Coffee Ltd. v. Agricultural Income-tax Officer [2001] 248 ITR 417; (2001) 1 SCC 278. Their Lordships were considering a provision in the Karnataka Agricultural Income-tax Act which is almost in pari materia with the provisions contained in section 13 of the Karnataka Sales Tax Act. Section 42 of the Karnataka Agricultural Income-tax Act t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax remained unaffected by the stay order and it continued to be in default. It was, therefore, liable to make payment of the penalty demanded under section 42." 6.. Construing section 42 in the context of non-payment of tax by virtue of a stay order granted by the court, the Supreme Court observed: "Section 42 speaks of an assessee in default. The question, therefore, is: can an assessee be said to be in default during the period for which an order of stay of recovery of the tax due from him is operating? The answer is indicated in the proviso to sub-section (2) itself. Sub-section (2) empowers the collection of tax from an assessee in default as if it were an arrear of land revenue and as if it were a fine imposed by a Magistrate under the Code of Criminal Procedure. The proviso says that where an assessee or other person has appealed or applied for revision of any order made under the said Act and has complied with an order made by the appellate or the revising authority in regard to the payment of tax, no proceedings for recovery under sub-section (2) may be continued until the disposal of the appeal or revision. Thus, there is recognition that during the period the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of sales tax remaining unpaid was automatic. Their Lordships observed as follows: "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. Mr. Sen has pointed out that the amount of sales tax payable by the appellant was reduced on appeal and the appellant is entitled to a consequential relief on that account. This is a matter which is outside the ambit of the question which has been dealt with in the judgment under appeal. In case the appellant is entitled to any relief on account of reduction of the amount of sales tax in appeal, it would be for him to agitate the matter in appropriate proceedings. The appeal consequently fails and is dismissed with costs." But, that case has to be distinguished hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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