TMI Blog2005 (5) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... acts are as follows: The appellants are the manufacturer of sugar. They purchase sugarcane from farmers. By virtue of the Sugarcane (Control) Order, 1966 made under the Essential Commodities Act, 1955 the price for such purchase is statutorily fixed. Clause 3 of the Sugarcane (Control) Order lays down the minimum price of sugarcane payable by a producer of sugar. This is the price which is payable immediately at the time that the sugarcane is purchased. Over and above this, by virtue of clause 5-A, an additional price is also payable. This additional price is to be fixed on the basis of a formula laid down in the First Schedule of the Sugarcane (Control) Order. The formula given therein is as follows: R L + 2A + B X = --------------------- 2CR is the amount in rupees of sugar produced during the sugar year excluding the excise duty paid or payable to the factory by the purchaser. It is evident from the formula itself that the additional price is the amount which is incapable of determination at the time the sugarcane is supplied to the factory by the grower. The additional price can only be determined at the end of the sugar year and not earlier. Even though the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r periods, as may be prescribed. (3) If no return is submitted by the dealer under sub-section (1) or sub-section (2) within the prescribed period, or if the return submitted by him appears to the assessing authority to be incomplete or incorrect, the assessing authority may, after making such enquiry as it considers necessary, determine the tax payable by the dealer to the best of its judgment: Provided that, before taking action under this sub-section on the ground that the return submitted by the dealer is incomplete or incorrect, the dealer shall be given a reasonable opportunity of proving the correctness or completeness of the return submitted by him. (4) If the assessing authority has reason to believe that the tax determined by it for any period was based on too low a turnover or was made at too low a rate or was based on too high a turnover or was made at too high a rate, it may enhance or reduce, as the case may be, such determination of tax: Provided that before making an enhancement of the tax payable as aforesaid, the assessing authority shall, except where such enhancement is based on the turnover finally determined for the preceding year, give a reasonabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... General Sales Tax Act, 1959 no interest can be levied unless and until an assessment has taken place and a notice of demand has been issued and tax had not been paid within the time specified in the notice of demand. In support of this submission, he relied upon the cases of J.K. Synthetics Ltd. v. Commercial Taxes Officer reported in (1994) 4 SCC 276 and Frick India Ltd. v. State of Haryana reported in See [1994] 95 STC 188. (1994) 5 SCC 559. 7.. On the other hand, Mr. Iyer submitted that the appellants had chosen to follow the procedure under section 13(2). He submitted that tax had to be paid on the actual turnover. He submitted that the decision of this Court in Kothari Sugars Chemicals Ltd.'s case See [1996] 101 STC 197. (1996) 7 SCC 751 was only concerned with the question as to whether the amounts paid in advance, over and above the price fixed under clause 5-A, can be considered to be price. He submitted that the observations made in that case are in the context of this question. He points out that this Court has in the case of U.P. Co-operative Cane Unions Federations v. West U.P. Sugar Mills Association reported in (2004) 5 SCC 430 so noted. He submitted that therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen that would not be price in the absence of a contract or any statutory provision. It will thus have to be held that in the monthly returns the advance should have been included as part of turnover. If tax has been paid on advance and it is found that excess payment has been made, refund of tax on the excess payment can be claimed. 10.. The question then arises whether interest, under section 24(3) can be charged on the clause 5-A price or on the advance and if so from what date. As has been noted hereinabove, the price fixed under clause 5-A can only be decided on the basis of a formula set out hereinabove. It therefore cannot be decided at least till the end of the sugar year. In practice it is however decided much later. As the price would be an unknown, neither the assessee could predict what the price would be nor could the assessing officer, even on the basis of his best judgment, predict what that price would be. Therefore till the price under clause 5-A is fixed there would be no question of an assessee including it in the monthly returns filed by him. A monthly return filed not showing the price fixed under clause 5-A would neither be incorrect nor incomplete. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (2) of section 13, the tax assessed or has become payable under this Act from a dealer or person and any other amount due from him under this Act shall be paid in such manner and in such instalments, if any and within such time as may be specified in the notice of assessment, not being less than twenty one days from the date of service of the notice. The tax under sub- section (2) of section 13 shall be paid without any notice of demand. In default of such payments the whole of the amount outstanding on the date of default shall become immediately due and shall be a charge on the properties of the person or persons liable to pay the tax or interest under this Act. (2) Any tax assessed on or has become payable by, or any other amount due under this Act from a dealer or person and any fee due from him under this Act, shall, subject to the claim of the Government in respect of land revenue and the claim of the Land Development Bank in regard to the property mortgaged to it under section 28(2) of the Tamil Nadu Co-operative Land Development Banks Act, 1934 (Tamil Nadu Act X of 1934), have priority over all other claims against the property of the said dealer or person a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of order passed in appeal, revision or review, within a period of ninety days from the date of receipt of the order, the Government shall pay by way of interest, where the amount refundable is not less than one hundred rupees, a sum equal to the sum calculated at the rate of one per cent or part thereof of such amount for each month or part thereof after the expiry of the said period of ninety days. Explanation . For the purpose of this section, the expression 'order passed in appeal, revision or review' shall not include an order passed in such appeal, revision or review with direction to make fresh assessment order." Under section 24(1) if the tax has been assessed or has become payable under the Act, then the payment has to be made within the said time as may be specified in the notice of assessment and tax under section 13(2) has to be paid without any notice of demand. However, as seen above, the tax under section 13(2), in the absence of any determination by the assessing authority, is tax as per the returns. If default is made in payment of such tax then interest becomes payable under the Act. In the present case, it is an admitted position that tax as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return was filed. The minority opinion held that tax was to be paid as per the return and so long as tax was paid as per the return, merely because in the final assessment it was held that the return was incorrect or incomplete interest could not be levied prior to the date of final assessment and the demand thereunder. The majority view was doubted and the question was referred to a Constitution Bench. The Constitution Bench in J.K. Synthetics Ltd.'s case See [1994] 94 STC 422. (1994) 4 SCC 276 accepted the minority view and overruled the majority view. The Constitution Bench held that tax was payable only as per the returns. It is held that if incomplete or incorrect return are filed it was open to the assessing officer to provisionally assess and make a demand. It is held that if that was not done then interest could not be levied on the footing that in a final assessment it is found that the returns had been incorrect. 15.. The decision in J.K. Synthetics Ltd.'s case See [1994] 94 STC 422. (1994) 4 SCC 276 was thereafter followed by another Constitution Bench in the case of Frick India Ltd.'s case See [1994] 95 STC 188. (1994) 5 SCC 559. These judgments fully cover the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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