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TMI Blog2019 (8) TMI 1362X X X X Extracts X X X X X X X X Extracts X X X X ..... me, owing to the interim orders of the Hon'ble Supreme Court. Just because the petitioner had chosen to pay the tax within the due date after the revisional authority had assessed the demand raised on sales of REP licences, it cannot be said that there was no liability cast on the petitioner during the time of original proposal to levy tax on REP licences for the relevant assessment years 1993-94 1994-95. Hence, when the question whether REP licences constitute goods came to be resolved by this Court in the year 1994 itself and there were no other contrary view expressed by any of the High Courts, the Hon'ble Supreme Court had only affirmed the views of the High Courts holding that REP licences constitute goods. In the instant case, the petitioner herein had sought for exemption from payment of tax on REP licences and the issue was pending before the Hon'ble Supreme Court in which the petitioner had also filed a SLP. During the pendency of such proceedings, there was no certainty on the decision to be taken in the issue as to whether there is liability cast on the petitioner, in view of the interim orders granted by the Hon'ble Supreme Court. The clarification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 1993-94 and on 25.03.1997 for the year 1994-95. The petitioner had paid the tax demanded. b) Thereafter, on 31.03.1999, the second respondent levied interest for the period from 20.12.1993 till 17.12.1997 (date of payment of tax) for the Assessment Year 1993-94. Likewise, for the periods 06.05.1997 to 28.05.1997 and 06.05.1997 to 10.06.1997, interest was levied for the Assessment Year 1994-95. c) As against the interest levied, revision petitions came to be filed before the Deputy Commissioner on the ground that interest would be leviable only after assessment is made and demand is raised and since the petitioner had paid the entire tax before the due dates, such interest cannot be levied. d) The question as to whether REP licences would constitute goods, which was pending before the Hon'ble Supreme Court of India, came to be allowed on 01.05.1996 in the case of M/s.Vikas Sales Corporation reported in 102 STC 106 . In this background, the Deputy Commissioner had allowed the revision petitions holding that interest was leviable only from 01.05.1996, for which purpose, reliance was placed on the decision of the West Benga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd submitted that in view of the interim orders of stay granted by the Hon'ble Supreme Court, the assessment orders were passed by keeping the levy of tax on the sales of REP licence, in abeyance. In view of the stay by the Hon'ble Supreme Court, the exemption was allowed, by retaining their liberty to reopen, as and when the orders are received in the case before the Hon'ble Supreme Court. The learned Special Government Pleader submitted that the law on the liability to pay tax on sales of REP licences was laid, as early as on 04.04.1994, in the case of P.S. Apparels V. Deputy Commercial Tax Officer reported in 94 STC 139 and it is in view of the interim stay order of the Hon'ble Supreme Court that the Assessing Officer was restrained from proceeding further. Similar views on such liabilities was also affirmed by this Court and Karnataka High Court and other High Courts and the Hon'ble Supreme Court had ultimately, only affirmed such views. By placing reliance on the decision of the Hon'ble Supreme Court in the case of Calcutta Jute Manufacturing Company and another V. Commercial Tax Officer and others and other appeals reported in 1997 (106) STC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether REP licences would constitute goods, was pending. 10.3. The petitioner had also filed a Special Leave Petition before the Hon'ble Supreme Court and the Assessing Officer had deferred the assessment in respect of REP licences for the year 1993-94 and had granted exemption for the year 1994-95 by his proceedings dated 31.01.1995 and 29.04.1996 respectively. 10.4. On 01.05.1996, the case of M/s.Vikas Sales Corporation reported in 102 STC 106 was decided by the Hon'ble Supreme Court, wherein REP licences were held to be goods. In this background, the Assessing Officer had proposed to redetermine the total and taxable turnover of the petitioner by adding the premium received on the sales of REP licences, to which the petitioner did not file their objections. Ultimately, when the revised assessment was made on 30.12.1997 for the year 1993-94 and on 25.03.1997 for the year 1994-95, the petitioner had paid the tax within the stipulated time. 10.5. Thereafter, the second respondent had levied interest under Section 24(3) of the TNGST Act by calculating the interest from the period 20.12.1993, till the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. The learned counsel for the petitioner had also placed reliance on the decision of M/s.EID Parry (India) Limited (supra) on the following observations:- The word turnover has been defined under Section 2(r) to mean the aggregate amount for which the goods are bought and sold. Under Section 13(2) the monthly return has to indicate the actual turnover and tax is then payable as per the return. If the return shows the actual turnover and tax is not paid as per the return, then interest would be payable under Section 24(3) as that would be a case where amount has remained unpaid after the date specified for its payment. However, if the monthly return does not indicate the actual turnover then it was for the Assessing Authority to make a demand on the footing that the return was incomplete or incorrect. In the absence of any such demand interest would not become payable under Section 24(3) as there is no provision for charging of interest prior to the date of demand. 14. By relying on the aforesaid observations and the principles laid down, the learned counsel submitted that since the petitioner had paid the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty or bona fides of the assessee are totally strange concepts even while considering the levy of penalty under section 12(4) and 12(5) of the Act. As rightly held by the Division Bench in the decision reported in (1992) 1 MTCR 81; (printed at page 157 infra) (State of Tamil Nadu v. Indian Silk Traders) though the element of deliberateness, wilfulness or blameworthy conduct on the part of the assessee may not be necessary for invoking section 12 or 12(5) yet the bona fides of the assessee requires to be gone into before imposing the penalty since the underlying intent of penalty is only to deal with the non-disclosure of a turnover which with the oblique purpose of evading liability or postponing the payment of tax lawfully due to the State. Viewed thus, we are unable to come to the conclusion that levy of penalty is warranted at least for the period prior to the date on which the department has first made publicly known its mind to bring to tax transactions of this nature. The respondents have made it known that the transactions of the nature under consideration are liable to be taxed at some point of time during the assessment years 1992-93 and the various asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are also in respectful agreement with the view expressed by the Division Bench of the Karnataka High Court in the decision reported in [1992] 86 STC 175 (Bharat Fritz Werner Ltd. v. Commissioner of Commercial Taxes). 18. We summarize our conclusions as hereunder: (a) REP licences/exim scrips are goods in etymological sense and in common parlance as also within the meaning of section 2(1) of the TNGST Act, 1959 and section 2(d) of the CST Act, 1956; (b) The transfer, sale or assignment of those licences for value or consideration shall be liable to levy of sales tax under the sales tax laws in force in the State. The sales to and purchase by designated banks are also subject to levy of tax; (c) The respective assessing authorities shall be at liberty to proceed in the matter further after giving a further opportunity to make representations by the assessees and in accordance with law, in cases where the proceedings have not been already finalised; (d) Wherever the proceedings have culminated in an order of assessments made already by the competent assessing authorities, the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r REP licences constitute goods came to be resolved by this Court in the year 1994 itself and there were no other contrary view expressed by any of the High Courts, the Hon'ble Supreme Court had only affirmed the views of the High Courts holding that REP licences constitute goods. 17. The Assessing Officer had also, while holding that the sales on REP licences are liable to tax, observed that the Hon'ble Supreme Court of India had also affirmed such liability. Touching upon this aspect, the revisional authority had placed reliance on the West Bengal Taxation Tribunal in the case of M/s.Shivdham Wood Products Private Limited (supra) and held that the petitioner would be liable to pay interest on the tax in respect of sales of REP licences from 01.05.1996, which is the date on which the Hon'ble Supreme Court had decided that REP licences would constitute goods in the case of M/s.Vikas Sales Corporation (supra). 18. The learned counsel for the petitioner attempted to convince this Court stating that the above decision of the West Bengal Taxation Tribunal is distinguishable for the reason that in the said case, the levy of tax on REP li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment of the Hon'ble Supreme Court ie., 01.05.1996. As such, there is no infirmity in the findings of the revisional authority on this aspect. 20. The learned Standing counsel for the respondents had placed reliance on the issue as to whether, interest is liable to be paid for the period when the respondents were restrained from levying any interest in view of the interim stay orders, for which purpose, the learned Standing counsel relied upon the decision of the Hon'ble Supreme Court in the matter of Calcutta Jute Manufacturing Company and another V. Commercial Tax Officer and others and other appeals reported in 1997 (106) STC 433 (SC), wherein it was held as follows: 15. But the position here is explicitly distinguishable from the factual situation in M/s JK Synthetics ltd. Here, nobody had doubt that if section 6B of the Act was called the tax was payable on the turnover. It was the Constitutional Validity of Section 6B which was challenged by the appellants in the earlier writ petitions before the Calcutta High Court and which finally ended up in upholding of it s validity. Hence, there was no question of the assess wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislative act. The presumption cannot be the other way around. 21. In the instant case, the petitioner herein had sought for exemption from payment of tax on REP licences and the issue was pending before the Hon'ble Supreme Court in which the petitioner had also filed a SLP. During the pendency of such proceedings, there was no certainty on the decision to be taken in the issue as to whether there is liability cast on the petitioner, in view of the interim orders granted by the Hon'ble Supreme Court. The clarification came only after the final orders were pronounced in favour of the department. Moreover in Calcutta Jute Manufacturing Company's case (supra), the validity of Section 6(B) imposing a tax on the actual aggrieved turn over of the dealer whose gross turn over exceeds ₹ 50 lakhs, was under challenge. The Hon'ble Apex Court, while distinguishing the factual situation in M/s.J.K. Synthesis limited Case (supra) held that when nobody had doubted that if Section 6(B) is valid, the tax was payable on the turn over and therefore, there was no question for the assessee to wait for the determination as there was no di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at when the assessee pays tax after it becomes due, the presumption is that the Department has lost the revenue during the interregnum period (the date when the tax became due and the date on which the tax is paid). The assessee enjoys that amount during the said period. It is in this sense that the interest is compensatory in nature and in order to recover the lost revenue, the levy of interest is contemplated by Section 120 of the Finance Act, 2000 retrospectively. The aforesaid extract is self explanatory to the effect that the Validation Act, validates all previous actions. 24. The learned counsel for the petitioner had placed reliance on the decision of Karthik Roller Flour Mills case (supra) , as well as S.Gurunathan's case . These decisions may not assist the petitioner to substantiate the grounds, since the decision in Karthik Roller Flour Mills case (supra) was rendered even prior to the Validation Act and insofar as the decision in S.Gurunathan's case (supra) is concerned, the High Court did not have the benefit of the Hon'ble Supreme Court's decision reported in Indodan Industries Limited case (supra) . In view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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