TMI Blog1995 (3) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 the interest was charged at Rs. 35,018 and Rs. 86,834 respectively. The aforesaid amount of Rs. 1,21,857 was included in the claim of Rs. 1,50,541 filed by the assessee and disallowed by the revenue authorities. The difference was on account of penalty as well tax charged at Rs. 24,250 and Rs. 4,434 respectively. The interest was paid on account of delayed payment of the sales-tax becoming due on the quarterly returns filed by the assessee. The interest so charged was of compensatory nature and hence was allowable under section 37(1) of the Act. This is as held in various decisions of both the Supreme Court as well the High Courts. To name a few they are :--- (1) Mahalakshmi Sugar Mills Co. v. CIT [1980] 123 ITR 429 (SC) ; (2) G. G. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t statute providing for the payment of such impost. In this respect we find that the interest and the penalty have been levied under the Central Sales-tax Act for both the assessment years 1981-82 and 1982-83. These are as under : Assessment Year 1981-82 Interest : ------------------------------------------------------------------- Quarter Tax due Late by Amount Interest -------------------- Rs. Rs. ------------------------------------------------------------------- 1st 31-7-1981 18 months 5,741 1,537 2nd 30-10-1981 15 months 8,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealer under this Act as if the tax or penalty payable by such a dealer under this Act is a tax or penalty payable under the General sales tax law of the State ; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State ; and the provisions of such law, including provisions relating to returns, provisional assessment, advance payment of tax, registration of the transferee of any business, imposition of the tax liability of a person carrying on business on the transferee of, or successor to, such business, transfer of liability of any firm or Hindu undivided family to pay tax in the event of the dissolution of such firm or partition of such family, recovery of tax from third parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... includes power to impose penalty along with other powers namely, review, revision, reference and compounding of offences, etc. Thus section 9(2) of the Central Sales-tax Act adopts the State procedural law. In the case of assessee it is the Haryana General Sales-tax Act. Under section 25 of the aforesaid Act, every registered dealer is to submit return along with the payment to tax on such dates as are prescribed. In the rules, quarterly returns have been prescribed. Every return is to be submitted within 30 days of the close of the quarter along with the proof of payment of tax. In case of failure to pay tax, simple interest is chargeable at the rate of 1% for the first month and 1 1/2% per month thereafter. These provisions have been made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard before levy of the same. Hence, it has characteristic of being penal in nature and thus not allowable. 6. On the other hand the interest chargeable is at a fixed rate which is automatic. There is no need to examine whether there is any reasonable cause for delay. Hence it cannot be termed as penal one as distinguished from wilful default. It is compensatory in nature, the same having been provided for speedy and prompt collection of revenue. For this we would rely on decisions of the various Courts. In the case of Associated Cement Co. Ltd. v. CTO [1981] 48 STC 466, their Lordships of Supreme Court have held that such interest is compensatory in character and not penal. Furthermore in case of CIT v. Udaipur Distillery [1986] 63 STC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble on an arrear of cess under section 3(3) is in reality part and parcel of the liability to pay cess. It is an accretion to the cess. The arrear of cess ' carries ' interest ; if the cess is not paid within the prescribed period a larger sum will become payable as cess. The enlargement of the cess liability is automatic under section 3(3). No specific order is necessary in order that the obligation to pay interest should accrue. The liability to pay interest is as certain as the liability to pay cess. As soon as the prescribed date is crossed without payment of the cess, interest begins to accrue. It is not a penalty, for which provision has been separately made by section 3 (5). Nor is it a penalty with the meaning of section 4, which pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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