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TMI Blog2009 (5) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty shall be made with interest even when there is a stay order by the Appellate Authority or by the High Court or by the Supreme Court, provided the amount is ultimately found due. The interest payable on such amount has to be assessed from the date when tax or penalty first becomes due.Therefore, both the questions of law have to be answered against the assessee-petitioner and in favour of the Revenue. - - - - - Dated:- 26-5-2009 - KUMAR M.M. AND BHALLA H.S. , JJ. The judgment of the court was delivered by M.M. KUMAR J. On the directions issued by this court in STC No. 1 of 1990, vide order dated May 22, 1997, following two questions have been referred by the Sales Tax Tribunal II, Haryana, Chandigarh (for brevity, the Tribunal ) for determination by this court: (a) Whether, in the facts and circumstances of the case, interest under section 59 of the Haryana General Sales Tax Act, 1973, is chargeable even on the demands which are quashed in appeal? (b) Whether, in the facts and circumstances of the case, the interest under section 59 chargeable even without service of demand notice? Brief facts of the case as per the statement of case are that the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act read with section 9(2) of the CST Act on the amount of tax which was finally assessed. In that regard the stand taken by the petitioner is that charging of interest is automatic and the interest chargeable must be looked into. The interest cannot be levied as originally stay was granted by this court and subsequently by the Supreme Court. The Revenue has defaulted by not issuing demand notices in time. In the absence of issuance of such demand notices, no opportunity was available to the petitioner to file reply by denying the assessment. Therefore, the petitioner cannot be burdened with interest because the demand notices have been issued after a lapse of a number of years. Before the Tribunal, it was also asserted that levy of interest by the Assessing Authority is not maintainable. However, the Tribunal, instead of deciding the controversy, remanded the matter to the Assessing Authority. Ultimately, the matter was decided against the petitioner-dealer on September 13, 1988 (A3). The operative part of the order passed by the Tribunal reads thus: After hearing both the counsel, I do not think there is anything wrong or illegal in the direction given by the first appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 42(2)(b) of the HGST Act to this court with a prayer for referring various questions of law and for setting aside order dated January 10, 1990 passed by the Tribunal, refusing to refer the questions of law. It was in the backdrop of aforementioned facts that this court vide order dated May 22, 1997 passed in STC No. 1 of 1990, has ordered that two questions of law be referred to this court. Mr. Kamal Sehgal, learned counsel for the petitioner-dealer, has argued that on the plain language of section 59 of the HGST Act, no interest and/ or penalty could be levied in the absence of any demand in respect thereof by the Assessing Authority. According to the learned counsel the provision postulates the payment of interest in a case where amount specified in any notice of demand whether tax or penalty is not paid within a specified period or within 30 days from the date of service of such notice. In that eventuality the dealer was liable to pay simple interest. However, in the present case for the reason of stay order no demand notice was issued for payment of interest or penalty. No one has put in appearance on behalf of the State of Haryana to support the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a dealer under the HGST Act whereas no such element is present in the definition of the word dealer under the PGST Act as was applicable to the Haryana before May 5, 1973 . The Supreme Court then goes on to observe in paras 10 and 11 of the judgment as under (page 202 of 63 STC): 10. What is important to note is that definition of the word 'dealer' in the Haryana Act has been framed only for the purpose of the provisions of that Act. The opening words of the definition section, section 2, make it clear that the expressions defined by that section are the expressions as used in the Haryana Act. Wherever, the word 'dealer' is used in the Haryana Act, one must turn to the definition contained in section 2(c) of that Act. Now, except for a few specified provisions, the Haryana General Sales Tax Act came into force on May 5, 1973. Section 6, its charging provision, commenced to operate from that date. Section 6(1) of the Haryana Act declares that the first year of which the turnover is liable to tax under that Act is the year 'immediately preceding the commencement of this Act'. It is obvious that section 6 does not govern the assessment years which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. The definition also rules out profit-motive from the expression dealer . The assessee-petitioner would, thus, be liable to pay tax which it has concededly paid. In that regard we may place reliance on judgments of the honourable Supreme Court rendered in the cases of Joint Director of Food v. State of Andhra Pradesh [1976] 38 STC 329; [1976] 3 SCC 598 and Board of Revenue v. A.M. Ansari [1976] 38 STC 577; [1976] 3 SCC 512. In the later judgment the honourable Supreme Court has held that under the statute applicable to an assessee profit-motive was not essential constituent. Therefore, it would all depend on the statutory definition given by the concerned statute. It was in the aforesaid circumstances that the parties were locked in legal battle which went on till 1986. In this court the matter was concluded on October 18, 1976 when the writ petitions filed by the assessee-petitioner were dismissed. Then the matter travelled to the honourable Supreme Court and was eventually decided in 1986. It is undisputed that all along there has been an interim order staying recovery firstly by this court and then by the Supreme Court. The assessee-petitioner had succeeded partially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified in any notice of demand, whether as tax or penalty, is not paid within the period specified in such notice, or in the absence of such specification, within thirty days from the date of service of such notice, the dealer shall be liable to pay simple interest on such amount at one per cent per month from the date commencing after the end of the said period of one month and if the default continues thereafter at one-and-a-half per cent per month for the whole of the period he continues to make default in the payment or a sum of ten rupees, whichever is greater: Provided that where the recovery of any tax or penalty is stayed by the appellate authority under sub-section (6) of section 39 or by the High Court or the Supreme Court, the amount of such tax or penalty shall be recoverable with interest at the rate mentioned above on the amount ultimately found due; and such interest shall be payable on such amount from the date the tax or penalty first became due: Provided further that where the amount of tax or penalty, not paid or paid less, does not exceed five hundred rupees, the interest payable thereon shall not exceed the amount of tax or penalty not so paid or paid les ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igatory on the part of the assessing officer to make an assessment in respect of interest which the amount of sales tax would carry under section 8(1A) of the Act. There is also no provision in the U.P. Act which requires the issuance of notice of demand in respect of the interest by the Assessing Authority to the assessee. Accordingly it was held that the interest is to be added to the amount of tax and shall be deemed for all purposes to be part of the tax. The aforesaid deeming provision has been added only for the purpose of recovery. The object apparently appears to be that the amount of interest should be recovered in the same manner as the amount of sales tax. It was with a view to put the matter beyond any pale of controversy and to obviate any objection that the interest on sales tax cannot be recovered as land revenue that sub-section (1-A) of the U.P. Act provided that the interest was to be added to the amount of tax and be deemed for all purposes to be part of the tax. The Supreme Court further held that the amount of interest cannot be predicated till such time as the arrears of sales tax are paid and it is consequently not possible to specify a definite figure in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (5) If any dealer fails to pay tax, as required by sub-section (2A) or by sub-section (3), he shall be liable to pay in addition to the tax payable, simple interest on the amount of tax remaining unpaid at one per cent per month from the date commencing with the date following the last date for the payment of tax, for a period of one month and at one-and-a-half per cent per month thereafter during the period he continues to make default in the payment: Provided that where the amount of tax not paid as required under sub-section (2A) or sub-section (3) does not exceed five hundred rupees, the interest payable thereon shall not exceed the amount of tax not so paid: Provided further that for the purposes of calculation of interest, a period of fifteen days or more shall be deemed to be one month and the amount of fifty rupees or more but less than one hundred rupees shall be deemed to be one hundred rupees and a period of less than fifteen days and an amount of less than fifty rupees shall be ignored. A perusal of the aforesaid provision makes it evident that the assessee has to pay simple interest in case he fails to make payment of tax as per the provisions of and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act that some demand of tax has been quashed and interest has been claimed on that demand of tax. Merely because at one forum demand was quashed, that would not absolve the assessee-petitioner from payment of tax if finally it has been found due. If tax is payable then interest would also be payable as per statutory provision. Therefore, we find that both the questions of law have to be answered against the assessee-petitioner and in favour of the Revenue. The argument of learned counsel for the petitioner-dealer that the judgments of the honourable Supreme Court in the cases of State of Kerala v. Joy Varghese [1999] 112 STC 651 and Vikrant Tyres Ltd. v. First Incometax Officer, Mysore [2002] 127 STC 5 do not advance the submissions made by the learned counsel. At first blush the aforesaid judgments would seem to apply to the facts of the present case but on a deeper examination it is revealed that the provisions governing the payment of interest are entirely different from section 59 of the HGST Act, which is reproduced in the preceding para. For example, in none of these cases a provision has been made which may be equivalent to first proviso to section 59 of the HGST Act, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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