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Issues: Dispute over agricultural income tax assessment for the year 1982-83, retrospective amendment of the Karnataka Agricultural Income-tax Act, liability for interest on delayed tax payment, interpretation of extension provisions under section 61 of the Act.
Analysis: The judgment by Justice Virendra Kumar Singhal of the Karnataka High Court dealt with a case involving a petitioner who owned a coffee estate and was assessed under the Karnataka Agricultural Income-tax Act, 1957. The dispute revolved around the assessment year 1982-83, with the return due on May 31, 1982, but an extension was granted until September 30, 1982. The petitioner paid the tax with interest in instalments. However, an amendment to the Act in 1983 made the provisions regarding the due date retrospective, causing a question of liability for interest on the delayed return submission. The petitioner argued that the retrospective amendment absolved them of the interest payment obligation, as the Act was amended after the return submission date. The assessing authority contended that since the petitioner had applied for an extension and paid the interest, they were not entitled to a refund. Justice Singhal noted that the retrospective nature of the amendment meant that the assessing authority's extension became irrelevant. He emphasized the principle that tax cannot be levied without legal authority, citing the Constitution of India's Article 265. The judgment delved into the nature of interest as compensatory for delayed tax payment and analyzed the amended provisions of section 61 of the Act, which now required interest payment only on the tax due from the original due date until the actual payment date. Given that the due date was extended under section 18, no interest was payable under section 61. Consequently, Justice Singhal ruled in favor of the petitioner, quashing the interest levied and directing any excess amount to be refunded according to the law. The writ petitions were allowed, and specific annexures were modified as per the court's directions.
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