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TMI Blog2014 (11) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... sion and has been followed subsequently in Frik India Limited and another vs. State of Haryana and others, (1994) 5 SCC 559, a case under Haryana General Sales Tax Act holding that the additional amount of tax found due after the dealer had deposited the entire tax due as per return without wilfully omitting any material information, interest charged to such amount is not proper. Dealer disputed its liability to pay the tax on realized rental charges for glass, bottles and crates. Subsequently, it was found that the stand of the dealer is not justified in view of the decision of Apex Court in the case of State of Orissa vs. Asiatic Gases Limited [2007 (5) TMI 322 - SUPREME COURT OF INDIA]. The dealer then urged that as he was bonafidely disputing the liability of payment of tax on the aforesaid item, the interest should be charged under section 8(1B) of the Act i.e. from the date of the assessment. In this factual background, the Apex Court held that the tax becomes admittedly payable once it has been held that the tax is payable under the Act, the interest would be payable in the terms of sub-section (1) of section 8 and not in terms of sub-section (1B) of section of the Act. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e differential amount even if the scheme is held to be still born. There can hardly be any dispute with the right of the State Government either to withdraw any such scheme or not to enforce it any further but it does not mean that such dealer who has complied with the letter and spirit of the scheme, may be saddled with the liability to pay the interest on the differential amount of tax. The scheme captured the attention of the dealers but it failed as it could not achieve the target, for no fault of the persons like the petitioner. - Decided in favour of assessee. - Writ Tax No. 1779 of 2008 - - - Dated:- 29-4-2013 - PRAKASH KRISHNA AND MANOJ KUMAR GUPTA, JJ. Rahul Agrawal for the petitioner. C.B. Tripathi, Special Standing Counsel, for the respondents. JUDGMENT Raising a short but interesting point with regard to the liability of the petitioner to pay the interest on its turnover of sale of jewellery articles and bullion, the present writ petition has been filed. The petitioner had opted for payment of composition fee as envisaged under section 7-D of the U.P. Trade Tax Act and the said composition scheme after three years was turned down by the State of Ut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n addition to what had been already deposited earlier in view of the above fact that the composition scheme is no longer in vogue. The difficulty to the petitioner arose by the letter dated 3rd of September, 2008 (Annexure-8) impugned in the writ petition asking it to pay interest on the aforesaid amount of ₹ 8,90,000/- as according to the respondent it was the admitted tax liability of the petitioner. Challenging the legality and validity of the said letter/order, the present petition has been filed. 6. Sri Anoop Kumar Singh, Commercial Tax Officer, Sector-16 and 17, Agra has filed a counter affidavit on behalf of the respondents, delineating therein the various clauses of the composition scheme. It is admitted that the government has decided to withdraw the scheme of compounding and the Commissioner, Commercial Tax vide letter dated 14th of May, 2008 informed about the decision of the government. Meaning thereby, the compounding scheme for the dealers dealing in silver and gold ornaments and bullion has been cancelled . The further averment is that within the meaning of section 8(1) of the U.P. Trade Tax Act, the petitioner is liable to pay the interest on the admitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2005 failing which it could be deposited on such terms and conditions with interest as provided in clause-3. 2. It further gives the option to such dealers, who fail to apply up to 15th of August, 2005, to file a composition application up to 15th of September, 2005 subject to fulfilment of the conditions made therein. 3. It further provides that the composition application can be filed along with late payment of fee up to 15th of October, 2005 subject to the fulfillment of other conditions mentioned therein. 4. Its clause-6 provides that if the scheme is not opted by 30,000 dealers by 4th of November, 2005 it shall be deemed that the scheme has been taken back and every taxpayer will have to pay the tax at full rate on its turnover. The said clause is reproduced below:- This is one of main clauses, which needs consideration. 5. Its clause-8 provides that the dealers, who have failed to opt the scheme up to 4th of November, 2005 and in the event that scheme has not been taken back and thirty thousand dealers have submitted their option for accepting the scheme, may avail the benefit of scheme by 15th of December, 2005 subject to the deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nover of purchase, or both used in the Explanation to section 8(1) of the Act should be read in conjunction with the phrase Assessing Officer may agree to accept the composition money either in lump-sum or at an agreed rate of his turnover in lieu of tax that may be payable by a dealer... The submission is that both the provisions should be construed harmoniously. The amount deposited by a dealer under section 7-D in lieu of tax will be the admitted tax payable by the such dealer. 16. In contra, the learned counsel for the respondents submitted that section 8(1) and the Explanation thereto clearly obliges a dealer to pay the interest on his failure to pay the tax admittedly payable by him. In other words, the petitioner having failed to pay the tax at the normal rate, composition scheme notwithstanding, is liable to pay the interest as it has failed to deposit the tax payable under the Act. 17. The second limb of the argument is that the composition scheme was only a proposal given by the State Government and it was never fructified into an agreement. 18. The following points fall for determination before us:- 1. Whether on the facts and circumstances of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said choice is in accordance with the scheme and is ultimately accepted by the authority concerned, it becomes an agreed amount of tax. Rule-41 deals with the submission of returns and assessment of tax, by every dealer liable to tax, under the Act. Dealers who have validly opted the payment in lump-sum under section 7-D, being not required to file the returns, are not subjected to assessment of tax, will be outside the purview of section 8 dealing with provision of payment and recovery of tax or Rule-41, till the acceptance or otherwise of the option of the dealer. To put it differently the 'time prescribed' will not mean the due date for filing the return, with regard to such dealers who have opted for under section 7-D of the Act. 23. Sri Rahul Agrawal, learned counsel for the petitioner, has placed strong reliance upon the judgment of the Apex Court in the case of J. K. Synthetics Ltd. vs. Commercial Tax Officer, [1994] 5 NTN DX 49; (1994) 4 SCC 276, a case under the Rajasthan Sales Tax Act to buttress his arguments that no tax admittedly payable was due. In this case a dispute was raised by the dealer that freight is not part of turnover, therefore, he is not lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnover shown in or based on the return . The word 'payable' is a descriptive word, which ordinarily means that which must be paid or is due or may be paid but its correct meaning can only be determined if the context in which it is used is kept in view. The word has been frequently understood to mean that which may, can or should be paid and is held equivalent to 'due'. Therefore, the conjoint reading of Sections 7(1), (2) and (2-A) and 11-B of the Act leaves no room for doubt that the expression 'tax payable' in Section 11-B can only mean the full amount of tax which becomes due under subsections (2) and (2A) of the Act when assessed on the basis of the information regarding turnover and taxable turnover furnished or shown in the return. Therefore, so long as the assessee pays the tax which according to him is due on the basis of information supplied in the return filed by him, there would be no default on his part to meet his statutory obligation under Section 7 of the Act and, therefore, it would be difficult to hold that the 'tax payable' by him 'is not paid' to visit him with the liability to pay interest under clause (a) of Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire tax due as per return without wilfully omitting any material information, interest charged to such amount is not proper. 26. Reliance was placed on EID Parry (India) Limited vs. Assistant Commissioner of Commercial Taxes, [2005] 27 NTN DX 211; (2005) 4 SCC 779. It is apt to take note of the Copy Right: P and M Technologies: Email.: [email protected] facts of the case. The dealers were given an option under the Tamilnadu General Sales Tax of paying tax in advance on the basis of monthly return on the provisional price of sugar. Subsequently, on the basis of the final price of sugar, the tax deposited by the dealer thereon fell short. The interest was also demanded. In this background, the question arose whether interest can be charged and if so from what date. The Court said that the final price was fixed under clause 5-A on the basis of the formula set out therein and it could not be decided at least till the end of the sugar year. In practice, it is, however, decided much later. In this fact situation, the Court observed that as the price would be unknown, neither the assessee could predict what the price would be nor could the assessing officer, even on the basis of hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Apex Court referred to herein above. The basic factual situation is common to the case on hand. The present case stands even on a better footing as the petitioner all the time complied with the letters of law by making the necessary deposit of tax as contemplated under section 7-D. It has not disputed its liability to pay the admitted tax even remotely while in the case of J.K. Synthetics Limited (supra), the issue as to whether the freight is part of turnover or not was raised by the dealer unsuccessfully. The petitioner has deposited the difference in the tax amount voluntarily on 5th of August, 2008. Whereas the State Government took a final decision not to continue the composition scheme only on 1st of May, 2008 and the information was given by the Commissioner of Commercial Tax through its Circular dated 14th of May, 2008. The petitioner has deposited the entire tax due as per the composition scheme and there is no allegation that the petitioner willfully omitted any material information. On any additional amount of tax found due as the result of withdrawal of the composition scheme, the petitioner is not liable to pay interest on the differential amount. 29. The le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .5 per cent per mensem is payable if the tax assessed is not paid within the specified time. 30. The aforesaid relied upon decisions by the learned standing counsel are not applicable to the facts of the present case as they were rendered under different factual situation. They relate to classification dispute or disputing the liability to pay interest. In the case on hand, in short the case of the petitioner is that the petitioner has deposited the tax, admittedly, payable by him under the scheme/Act. The petitioner is not raising any classification dispute. In our view, these cases do not advance the case of the department any further and are of little assistance. 31. The upshot of the above discussion is that on true and correct interpretation of Explanation to section 8 (1) of the Act, this provision is not attracted here and the petitioner has paid the tax admittedly payable by him under the scheme and the liability of interest cannot be fastened when the scheme itself has been withdrawn after a period of three years. Our view also finds support from clause-6 of the scheme (already reproduced in the earlier part of the judgement) which provides that if the scheme is take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld also bear in mind the liability which was incurred by such dealers who opted for the scheme. The condition No. Jha provides that a dealer who has opted for the scheme has been injuncted to realise the tax from the purchasers. Such dealer has been denied any other type of concession which might be available otherwise under the Act. It also casts an obligation on the State Government to review the situation periodically to find out the response of the scheme. 04th of November, 2005 is the cut off date fixed under the scheme beyond which no dealer could opt for the scheme even after the payment of late fee, interest etc. The least which could be expected from the State Government to have given consideration to the number of applicants who opted for the scheme and the amount collected under the scheme on the cut off date i.e. 04th of November, 2005 or shortly thereafter within a reasonable period of time. It appears that the State Government slept over the matter and did nothing. It could not move either way due to inertia and woke up after three years i.e. on 1st of Copy Right: P and M Technologies: Email.: [email protected] May, 2008 when it took a conscious decision that due t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in no manner make the petitioner liable to pay the interest under section 8(1) of the Act on the differential amount of tax. 39. We may notice one decision of this Court in Jhamman Lal Oil Mills vs. State of U.P., (2007) 6 VLJ 3, a case under section 7- D of the Act. Sri Rahul Agrawal very fairly placed the above decision before us which is apparently against his stand but he distinguishes it on facts. This was a case with regard to another scheme as in the case on hand, issued under section 7-D of the Act by the State Government. It was withdrawn within six months from the date of the scheme and the writ petitioner therein challenged the authority of the State Government to withdraw the scheme, contending that he has opted under the scheme and deposited the tax. The Court interpreted the condition no.1 of the composition scheme, in which it was provided that if the amount of ₹ 750 Lakhs is not collected then the scheme would not be enforced. The Court interpreted that the scheme was still born and rejected the challenge to withdrawal of the scheme. The said decision is distinguishable on facts as the challenge therein was with regard to the power of the State Government ..... X X X X Extracts X X X X X X X X Extracts X X X X
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