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2021 (1) TMI 707 - HC - VAT and Sales TaxValidity of assessment order - rate of tax - restaurant where ready to eat unbranded foods including sweets, savories, unbranded, non-alcoholic drinks and beverages are served - respondent pointed out that though the petitioner was liable to pay tax at 12.5% as per Section 7(1)(a) of the Act, they had paid tax only at 2% - interest on short paid tax - Section 27(1)(b) of TNVAT Act - HELD THAT:- The petitioner who was not eligible to invoke Section 8 of the Act cannot advance the contention that re-assessment is without jurisdiction. Mere filing of the return in Form-L cannot be determinative of the issue. Section 27(1)(b) of the Act can be invoked when it is noticed within the limitation period that the whole or any part of the turn over of business of a dealer has been assessed at a rate lower than the rate at which it is assessable. The petitioner who ought to have been assessed and directed to pay at 12.5% of the taxable turn over had paid only at 2%. The respondent rightly determined the difference of tax payable by the petitioner at ₹ 59,52,423/-. Rate of tax - HELD THAT:- As per Section 42 of the Act, the interest is computed at the rate of 2% per month. The contention of the petitioner's counsel is that there can be levy of interest only if after a formal assessment order is passed, the amount remains unpaid. In the case on hand, the impugned orders came to be passed only on 16.08.2012. Therefore, there cannot be direction to pay interest for the period preceding the said date. Though this contention is attractive, it is necessary to reject the same because the petitioner had filed false returns. The petitioner is therefore liable to pay interest at the statutory rate from the date when the tax became due and payable by them. The petitioner by their conduct invited the impugned orders and have to blame themselves for the resulting consequences - The impugned orders do not call for any interference and is sustained. Interest on the difference in amount at the rate of 24% even for the period during which these writ petitions were pending before this Court - HELD THAT:- The writ petitions were admitted and Rule Nisi was issued on 05.10.2012. They were taken up for final disposal only in June 2019. The cases were adjourned as the government counsel wanted time to file counter. Counters were eventually filed on 01.08.2019. Records were called for on 26.08.2019 and the matters were directed to be listed on 13.09.2019. They came to be listed only now. The petitioner cannot be blamed for non listing of the cases. If the petitioner is made to pay interest even for this period, the petitioner will definitely be put to immense hardship. He will have to suffer disproportionate burden. The executive branch has contributed to accumulation of arrears. The wages of delay has to be borne by the department in this case to some extent. The principle of proportionality will have to be incorporated even in matters relating to levy of interest. It is relevant to recollect a rule of Hindu law, namely, Damdupat. It was evolved as a warning to the creditor to take effective steps for realising the debt from the borrower within reasonable time so that there be not such accumulation of interest as would be in excess of the principal amount due, as in that case he would have to forego the excess amount - instead of directing the respondent to levy the interest at the statutory rate as per Section 42 of the Act, the rate of interest is scaled down to 6% per annum for the period during which the writ petitions were pending before this Court. The petitioner of course has to pay at the statutory rate of interest for the period before filing of the writ petitions and for the period commencing from the date of disposal of the writ petitions till the date of payment. Petition disposed off.
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