TMI Blog2014 (11) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... enquiry, or pass such order as it may think fit. The power necessarily includes the power of setting aside the assessment and remand the matter. The power is quite wide. There is absolutely no limitation as to exercise of the power by the appellate authority and if so, there is no reason to deny him the power to entertain an application of the assessee to consider the prayer to produce 'C' form (declaration) provided the assessee is able to satisfy the authority that due to reasons beyond his control he could not produce them before the assessing authority. It is true that the assessee cannot, as a matter of course, produce these documents before the appellate authority. He will have to show sufficient cause as to why he could not produce them earlier. It is clear, provision for charging interest is introduced in order to compensate for the loss occasioned to the revenue due to delay in payment of tax. The provision for charging of interest can only be on the basis of a statutory provision. It is a substantive law. The object is to compensate the revenue for delay in payment of tax. Therefore, effect has to be given to the said provision strictly in accordance with law. So long ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of that amount and it deprived the State of the benefit of that amount and therefore, when the liability to pay tax is not disputed, not only he is liable to pay tax, he is liable to pay interest from the date he was liable to pay tax to compensate the delay in payment of tax. Therefore, the finding recorded by the Tribunal by misreading the judgment of the Apex Court referred to supra requires to be set aside and accordingly we hereby set aside the said finding. After examining those declarations, after hearing the assessees, the Assessing Authority has determined that the assessee cannot have the benefit of such declarations. After rejecting the claim made on the basis of declarations, orders are passed levying tax under the VAT Act. Now the question is interest on such tax is payable from what date. In our view, the aforesaid circumstances are covered by the judgment of the Apex Court in the aforesaid Constitution Bench decision. In cases where declaration in Form-C is furnished, the Assessing Authority at the time of assessment determines after hearing the assessee that they cannot be acted upon, they are defective and the assessee is not entitled to the benefit of such decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' form is not at all furnished and the assessee admits the liability to pay tax, from what date the interest on the delay in payment of tax has to be levied?; 2. If 'C' form furnished is found to be defective for any reason whatsoever and the assessee is called upon to pay tax, from what date the interest is payable thereon? 5. Question No.1: Inter-State Trade or Commerce is regulated by the provisions of the CST Act, 1956. Section 6 of the CST Act is the charging section. Every dealer registered under the CST Act is liable to pay tax under the Act on all sales of goods other than electrical energy effected by him. In the course of inter-State trade or commerce during any year on and from the date so notified. The said tax is payable to the Central Government. Section 9 provides levy and collection of tax and penalties. By virtue of the said provision the appropriate State shall, on behalf of the Government of India, assess, re-assess, collect and enforce payment of tax, including any interest or penalty payable by a dealer under the CST Act as if the tax or interest or penalty payable by such a dealer under the CST Act is a tax or interest or penalty payable unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or [in the tele-communications network or in mining or in the generation or distribution of electricity or any other form of power; (c) are containers or other materials specified in the certificate of registration of the registered dealer purchasing the goods, being containers or materials intended for being used for the packing of goods for sale; (d) are containers or other materials used for the packing of any goods or classes of goods specified in the certificate of registration referred to in [****] clause (b) or for the packing of any containers or other materials specified in the certificate of registration referred to in clause (c). (4) The provisions of sub-section (1) shall not apply to any sale in the course of inter -State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority: Provided that the decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may allow such declaration or certificate to be furnished within such further time as that Authority may permit. Therefore, the dealer who wants to claim the benefit of concessional rate of tax has to furnish the declaration form within the aforesaid time prescribed or within the extended time to avail the said benefit. At any rate the said Form-C has to be produced at the time of passing the assessment order to have the benefit. In dealing with the question whether 'C' form could be produced at the appellate stage, a Division Bench of this court in the case of A.S. Nasiruddin v. CCT [1994] 94 STC 399 (Kar.) has held as under: Section 8(1) of the Central Act provides for levy of tax on sale of goods in the course of inter-State trade or commerce at a concessional rate. To avail of this the dealer shall have to furnish 'C' forms (declaration forms). The declaration thus furnished will be the evidence of the nature of the transaction. This declaration has to be obtained by the assessee from another dealer. The question is whether production of this evidential document cannot be permitted in the proceedings before the appellate authority or before the Appellate Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Tribunal shall after giving both the parties to the appeal reasonable opportunity of being heard, pass such orders thereon as it thinks fit. We do not find any limitation on the power of the Appellate Tribunal even under section 22. No doubt various aspects of the appellate power are not enumerated as in the case of section 20(5). Obviously because the Appellate Tribunal is the highest statutory Tribunal under the Act, the Legislature has left the issue to the discretion of the Appellate Tribunal to pass such orders thereon as the Tribunal may think fit with regard to the appeal. The order which the Tribunal would think fit to make has, necessarily a judicial order. In the absence of any restriction as to the scope of this power, the scope has to be inferred by reference to the principle governing the appellate power. It will lead to several difficulties if we hold that the Appellate Tribunal cannot entertain any fresh evidence or additional evidence under any circumstances. There may be several instances wherein as assessee may have been prevented from producing material before the assessing authority or the first appellate authority; the circumstances under which an assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... background of the statutory provisions the question that arises for our consideration in these revision petitions is, if the assessee having claimed the benefit of concessional rate of tax under the CST Act fails to produce the 'C' form declarations and he accepts the assessment order levying tax from what date the interest is payable on such tax. Liability to pay tax arises u/s 9(2B). This provision was inserted by Act 10 of 2000. It is retrospective in operation. It reads as under: 9(2B) If the tax payable by any dealer under this Act is not paid in time, the dealer shall be liable to pay interest for delayed payment of such tax and all the provisions for delayed payment of such tax and all the provisions relating to due date for payment of tax, rate of interest for delayed payment of tax, of the general sales tax law of each State, shall apply in relation to due date for payment of tax, rate of interest for delayed payment of tax, and assessment and collection of interest for delayed payment of tax under this Act in such States as if the tax and the interest payable under this Act were a tax and an interest under such sales tax law. 10. A reading of the aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in CST Act or VAT Act prescribing the time from which the interest is payable and also the rate at which interest is payable in case of non-furnishing 'C' forms. 14. In support of the respective contentions reliance is placed on the two judgments. The revenue relies on a judgment of the Full Bench of the Kerala High court in the case of State of Kerala v. Western India Cosmetic Health Products Ltd. [2010] 32 VST 325 wherein it has been held as under: On going through the provisions both before and after the amendment, it is clear that interest is compensatory in nature inasmuch as it is payable from such date on which tax would have been fallen due, had the dealer included Actual turnover in the return relating to such period. The Liability arises on account of failure of the dealer to include any turnover of his business in any return filed. In this context, counsel for the respondents submitted that the turnover by itself does not determine any tax liability and that is why the provision is amended later to include the taxable turnover in the Section and consequently there cannot be any liability for interest for the period prior to the amendment if the turno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax that is between assessed tax and tax paid based on the return. 15. The learned counsel for the assessee placed reliance on the judgment of the Constitution Bench of the Supreme Court in the case of J.K. Synthetics Ltd. v. CTO [1994] 94 STC 422: Before we proceed further we must emphasise that penalty provisions in a statute have to be strictly construed and that is why we have pointed out earlier that the considerations which may weigh with the authority as well as the Court in construing penal provisions would be different from those which would weigh in construing a provision providing for payment of interest on unpaid amount of tax which ought to have been paid. Section 3, read with Section 5 of the Act, is the charging provision whereas the rest of the provisions provide the machinery for the levy and collection of the tax. In order to ensure prompt collection of the tax due certain penal provisions are made to deal with erring dealers and defaulters and these provisions being penal in nature would have to be construed strictly. But the machinery provisions need not be strictly construed. The machinery provisions must be so construed as would enable smooth and effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he shall furnish prescribed returns for the prescribed period within the prescribed time to the assessing authority. By the proviso the time can be extended by not more than 15 days. The requirement of Section 7(1) is undoubtedly a statutory requirement. The prescribed return must be accompanied by a receipt evidencing the deposit of full amount of 'tax due' in the State Government on the basis of the return. That is the requirement of Section 7(2). Section 7(2-A), no doubt, permits payment of tax at shorter intervals but the ultimate requirement is deposit of the full amount of 'tax due' shown in the return. When Section 11B(a) uses the expression tax payable under sub-sections (2) and (2-A) of Section 7 that must be understood in the context of the aforesaid expressions employed in the two sub-sections. Therefore, the expression 'tax payable' under the said two sub-sections is the full amount of tax due and 'tax due' is that amount which becomes due ex hypothesi on the turnover and taxable turnover 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to be given to the assessee to pay such tax determined after adjudication within the time by raising a demand. If the assessee commits a default in payment of tax within that time, then he would become a defaulter. It is thereafter his liability to pay interest would arise. The reason being the assessee cannot project the final assessment and he cannot be expected to pay the tax on that basis to avoid the liability to pay interest. It would be asking him to do it near impossible. Therefore, the Apex Court held in those circumstances the liability to pay tax arises only after such adjudication and not earlier to it. There cannot be any quarrel with the said proposition. 17. But in the instant case on the date the assessee filed the return he knew what is the tax payable under the State Act as well as under the Central Act. In order to get concessional rate of tax payable under the Central Act he knew he has to furnish a declaration in Form-C. He also knew that if he fails to furnish a declaration in Form-C, he is liable to pay tax under the said Act. Therefore, it is not a case where the assessee was not aware of his liability to pay tax. He was conscious of the tax liability. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return more that three months after tax became payable, declaring additional tax, but fails to pay any interest declared to be payable under sub-section(1); or c. fails to declare any tax or interest which should have been declared; or d. fails to make a return; such dealer shall be liable to pay interest in respect of the tax payable and additional tax payable as declared by him or the tax payable and interest payable under subsection (1) for the period for which he has failed to furnish a return. (3) Where any other amount is payable under this Act is not paid within the period specified in Section 42, interest shall be payable on such amount from such period. (4) The interest shall also be payable under this section during any period during which recovery of any tax or other amount payable under the Act is stayed by an order of any authority or Court in any appeal or other proceedings disputing such tax or amount. 19. Sub-section(1) of section 36 provides for the liability to pay simple interest on any amount of tax which should have been declared on a return, but which has been omitted from it. Sub-section(2) further speaks about payment of interest on the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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