TMI Blog2008 (12) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... up for admission, the Learned Special Government Pleader submitted that the above case was decided ignoring earlier decisions of our Court reported in (1980) 46 STC page 451 (S. Rajamani Vs. The State of Tamil Nadu), (1988) 69 Page 195 (Hindustan Import Export Corporation Vs. State of Tamil Nadu), and above all (1983) 53 STC page 1(Ashok Service Centre and another Vs. State of Orissa). He submitted that 136 STC 606 (cited supra) might require reconsideration. 3. The learned Special Government Pleader very fairly placed all the decisions for and against the department and argued the matter. 4. We will first deal with the pure question of law and then the two cases on their individual merits. 5. The AST act came into force in 1970. The validity of this Act was upheld in (1974) 34 STC 73(S. Kodar Vs. State of Kerala). The Act is a short one. We will extract the same. The Tamil Nadu Additional Sales Tax Act, 1970 (ACT No.XIV of 1970) (Received the assent of the Governor on 22nd May 1970) An Act to provide for the levy of Additional Sales Tax WHEREAS it is considered necessary to levy an additional tax on the sale or purchase of goods; BE it enacted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 6. The Statement of Objects and Reasons for the 1996 Amendment act is as follows: With a view to simplifying the assessment and collection of sales tax the Government have decided to collect Additional sales tax payable under the Tamil Nadu Additional Sales Tax Act, 1970 (Tamil Nadu Act 14 of 1970) by dealers other than a casual trader or agent of a non resident dealer or a local branch of a farm or company situated outside the state at the rate of 2.5 percent in respect of dealers whose taxable turnover exceeds Rs.100 crores but does not exceeds Rs.300 crores and at 3 percent in respect of dealers whose taxable turnover exceeds Rs.300 crores and to amend the said Act for the purpose. 2. Every dealer, who is liable to pay additional Sales Tax under the said Act has to furnish returns and statements in the prescribed form. But there is no specific provision in the said Act, to levy penalty for non submission of return or statement or furnishing incorrect or incomplete return or statement by the dealer. The Sales Tax Appellate Tribunal has also held that, in the absence of specific provisions in the said Act, penalty could not be levied for belated submission of returns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition Nos.6777 and 6778 of 2001, dated 14-08-2002), where, a division Bench of this Court, after pointing out the subsequent rulings of the Supreme Court in the case of J.K. Synthetics [1994] 94 STC 422 and in the case of India Carbon Ltd. [1997] 106 STC 460, held that the ruling reported in Deputy Commissioner (C.T.) v. M. Murugesan and Bros. [1985] 58 STC 143 (Mad.) is no longer a good law. We find considerable force in the submission made by the learned counsel for the petitioner. The levy of penalty on surcharge cannot be sustained. 9. The Learned Special Government Pleader submitted that the issue will have to be looked at in the context of the State Act and not the CST Act. He submitted that J.K.Synthetics and India Carbon dealt with CST Act, which did not have any provision for levying interest, and those decisions were given in that context. They will not apply to the present case where the original Act namely the Tamil Nadu General Sales Tax Act ('TNGST Act' in short) contains the penalty provision and in view of S.2(1)(b), the penalty sections in TNGST Act must be read into the AST Act. He also submitted that the Amendment Act 1976 cannot be construed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. State of Assam) 11. Now we will take up each decision, one by one. a) 34 STC 73 (cited supra) dealt with the validity of the AST Act. It was upheld. Entry 54 in List II authorises the State Legislature to impose a tax on the sale or purchase of goods. So, the contention of the appellants that the additional sales tax is not a tax on sales but on the income of the dealer is without any basis. But the validity is not challenged here. So it is not necessary to dwell on this case any further. b) 39 STC 12 (cited supra) In this, the assessee claimed refund of tax in accordance with S.15 (b) of the CST Act. The Supreme Court held that even if there was some ambiguity in the Clause (b) of S.15 as it originally read, it had been clarified by the Amendment Act 1976. In this context, the Supreme Court said, The amendment made in clause (b) can thus be taken to be an exposition by the legislature itself of its intent contained in the earlier provision. ... As already mentioned above, the legislature as a result of the amendment, clarified what was implicit in the provisions as they existed earlier. An amendment which is by way of clarification of an earlier ambiguous pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the provisions of the Sales Tax Act would apply to the levy of surcharge. In that event section 22 of the Tamil Nadu General lSales Tax Act, 1959, providing for levy of penalty for any illegal or unauthorised collection of tax would also have been attracted by reference to levy of surcharge. However, section 3(2) of the Surcharge Act is more restrictively worded, and therefore, on the language of the provision, there is no scope for levy of penalty under section 22 of the Sales Tax Act for illegal or unauthorised collection of surcharge. Therefore, our Court has construed an identically worded section as giving no scope for levying penalty. e) 53 STC 1(cited supra) This is the trump card in the hand of the learned Special Government Pleader, according to whom it answers all the questions. In this case, the question was whether the levy of additional tax under the Orissa AST Act was a single point levy or multipoint levy.This Act is identical to the Tamilnadu AST Act. Levy of single point tax and prohibition of tax at more than one point is the important feature of the Principal Act. The Supreme Court held as follows: The assumption made by the High Court that the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing the decision of the Supreme Court in Ashok Service Centre v. State of Orissa [1983] 53 STC 1 (SC) we hold that the penalty has rightly been levied in this case under section 22 of the Tamil Nadu General Sales Tax Act, 1959 read with section 3(2) of the Surcharge Act. In view of the decision of the Supreme Court in Ashok Service Centre v. State of Orissa [1983] 53 STC 1 (SC), the decision rendered by this Court in State of Tamil Nadu v. Mathurai Veerasamy Co. [1983] 52 STC 131 cannot be taken as laying down the law correctly. g) 69 STC 195 (cited supra) ... yet in view of the specific provisions of section 3(2) of the Surcharge Act and section 22(2) of the Sales Tax Act and inasmuch as Deputy Commissioner (C.T.) v. M. Murugesan and Bros. [1985] 58 STC 143(Mad.) has considered the decision of the Supreme Court in Ashok Service Centre v. State of Orissa [1983] 53 STC 1, we are of the view that the suo motu restoration of the penalty imposed by the assessing authority, by the Board, is correct and in accordance with law. ... We hold that the provision in section 3(2) of the Surcharge Act would apply to all the provisions of the Sales Tax Act. h) We have already ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; [1963] 3 SCR 893). But it must also be realised that provision by which the authority is empowered to levy and collect interest, even if construed as forming part of the machinery provisions, is substantive law for the simple reason that in the absence of contract or usage interest can be levied under law and it cannot be recovered by way of damages for wrongful detention of the amount. (See Bengal Nagpur Railway Co. Ltd. v. Ruttanji Ramji AIR 1938 PC 67 and Union of India v. A.L. Rallia Ram [1964] 3 SCR 164 at 185 to 190). Our attention was, however, drawn by Mr Sen to two cases. Even in those cases, CIT v. M. Chandra Sekhar [1985] 151 ITR 433 and Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961 (SC), all that the Court pointed out was that provision for charging interest was, it seems, introduced in order to compensate for the loss occasioned to the Revenue due to delay. But then interest was charged on the strength of a statutory provision, may be its objective was to compensate the Revenue for delay in payment of tax. But regardless of the reason which impelled the Legislature to provide for charging interest, the Court must give that meaning to it as is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cable to such legislations as explanatory and declaratory in nature. 12. It is clear from the above cases that the State is competent to impose tax on sale or purchase of goods (Entry 54 List II,); and this would include levy of additional sales tax; the words sales tax law of the appropriate State includes AST, surcharge and additional surcharge; the General Sales Tax Act which is the principal Act and the AST Act must be read as if they are one so as to give effect to the provisions of the Act except where the later Act manifests an intention to modify the main Act; the charging provisions are substantive provisions; there can be no levy of penalty without a charging section. The rule against restrospectivity is not applicable to clarificatory legislation. 13. Bearing this in mind, we will go back to the S.3-B. Section 3-B. Levy and collection of penalty-All the provisions relating to offences and penalties of the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959), hereafter in this section referred to as the said Act, shall, with necessary modifications, apply in relation to the assessment, re-assessment, collection and the enforcement of payment of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have been no difficulty to hold that S.22 of the TNGST Act was also attracted by reference. We respectfully think that this is the correct way to understand the Section. We have to read S.2(1)(b) in an identical way. If so, then the AST Act as it reads before the amendment had no charging provision. A charging section is substantive law as seen in 94 STC 422(cited supra). Therefore, there can be no levy of penalty without the charging section. This is in accordance with India Carbon and J.K. Synthetics. The judgments, which deal with clarificatory sections are of no help since the S.3-B is not a clarificatory section, it introduces for the first time the power to levy penalty. Karthik Roller Mills case correctly hold that in the absence of the substantive provision, in the AST Act itself, relating to levy of interest, the provisions of the TNGST Act cannot be the source of power of such levy. Similarly, unless there is a charging section for levy of penalty, there can be no automatic reading of the power to levy penalty. The levy of penalty cannot be sustained. We are in agreement with 136 STC 606(cited supra). In our view, therefore, we see no reason to refer the matter for re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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