TMI Blog2002 (11) TMI 749X X X X Extracts X X X X X X X X Extracts X X X X ..... ws: In the first three writ petitions, the assessees is one and the same and the assessment years are 1988-89, 1989-90 and 1990-91. In respect of the assessment year 1988-89, which is the subject matter of W.P.No. 18010 of 2000, the facts are as follows:- 3. The petitioner is a Rule 18 assessee opted for self-assessment in accordance with Section 13(2) of the Tamilnadu General Sales Tax Act, 1959 read with Rule 18 of the Tamil General Sales Tax Rules, 1959 (herein after referred to as Act and Rules respectively for brevity). The petitioner undertook steel structural works contracts. For the months of April 1988 to August 1988, the petitioner filed their monthly return, which included the turnover of works contract also in Form A1 and paid the tax. From September 1988 onwards though the turnover relating to structural works contract was disclosed in the monthly return, the petitioner did not pay the tax due thereon by saying in the return that the provisions of the Act in respect of works contract had been stayed by this Court on the the writ petition filed by the petitioner. On 6.12.1989, the petitioner filed a consolidated return for the year 1988-89 accepting the works contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evised return on 6.11.1994 and paid the tax on 22.11.1994 in a sum of Rs.7,40,3 41 . The assessing officer demanded interest under Section 24(3) of the Act for the period from 20.5.1991 to 22.11.1994 by his notice dated 18.12.1996. After considering the objections of the petitioner dated 30.12.1996, the assessing officer confirmed the imposition of interest by his order dated 30.9.1997. As that of the previous assessment year, the petitioner carried the matter on revision to the Deputy Commissioner and further revision to the Joint Commissioner and having obtained an unfavourable order moved the Special Tribunal by filing petition in O.P.No. 76 of 2001, which was also dismissed on 20.4.2 001. That order is now agitated in the present writ petition in W.P. NO. 10195 of 2001. For this assessment year, the assessment order was passed on 30.3.1995. 6. The petitioner in W.P.No. 21624 of 2000 who is also a Rule 18 assessee, filed returns on self-assessment basis as per the provisions of Section 13(2) of the Tamil Nadu General Sales Tax Act read with Rule 18. The petitioner filed monthly returns in Form A1 disclosing the works contract turnover also among others in respect of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est for the belated payment, which is not in accordance with law. 8. It is further contended by the learned Senior Counsel that inasmuch as no provisional assessment has been made rejecting the petitioners return filed in the respective months by quantifying the taxable turnover and the tax due thereon, the assessing officer has no jurisdiction to invoke Section 24(3) of the TNGST Act. It is further contended that interest can be imposed only on any amount remaining unpaid after the due date specified for its payment. The tax was quantified only on final assessment. Even prior to final assessment was made the petitioner filed revised returns and paid the tax due thereon and as such the imposition of interest is uncalled for and against the provisions of Section 13(2) read with Section 24(3) of the TNGST Act. 9. Mr.Ramagopal, learned counsel appearing for the petitioner in W. P.No.18010 of 2000 argued that the provision for levy of interest for delayed payment of tax is a substantial provision and required strict construction. It is not adjunctive law or machinery provision. He also filed the legal proposition which in all aspects similar to the contention raised in the affidavi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the returns is not paid within the time stipulated by the statute, the imposition of interest is automatic and thus argued for sustaining the order impugned. 13. We heard the rival contentions of the learned counsel appearing on either side and perused the materials on record. 14. In order to appreciate the controversy, it is appropriate for us to refer the relevant provisions of the TNGST Act and the Rules. "Section 13: Advance payment of tax - (1) The tax for each year payable under any of the provisions of this Act may be collected in advance during the year in monthly or other prescribed instalments and for this purpose a dealer may be required to furnish within the prescribed period such returns as may be prescribed. The assessing authority may provisionally determine the amount of tax payable in advance during any year or in respect of any period and on such determination and intimation to the dealer, he shall pay such tax in such instalments and within such period as may be prescribed. (2) In lieu of the tax provisionally determined under sub-section (1 ), a dealer may, at his option, pay tax in advance during the year on the basis of his actual turnover for each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he section 3, 3-A,3-B, 4, 7-A or 7-C for the month to which the return relates after deducting therefrom the amount, if any, claimed as refund due in the month under rule 23. (3) The return inform A-1 so filed shall, subject to the provisions of sub-rule (4) be provisionally accepted. If the return is submitted without proof of payment as specified in sub-rule (1) of rule 55 for the full amount of tax payable after deducting therefrom the amount, if any, claimed as reimbursement or refund due in the month under rule 23, such amount of tax shall become due on the date of receipt of the return or on the last due date as prescribed in sub-rule (2), whichever, is later, and shall be recovered in accordance with the provisions of the Act without any notice of demand to the dealer. (4) If no return is submitted in respect of any month on or before the date specified in sub-rule (2) or before the expiry of the period prescribed in sub-rule (5) or if the return submitted appears to be incorrect or incomplete, the assessing authority shall, after making such enquiry as he considers necessary and after giving the dealer notice as prescribed in rule 12, determine the turnover to the best ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing month. When a monthly return filed is accepted provisionally under rule 18(3) any tax payable for which there is no proof as on the 20th of the month shall be recovered in accordance with provisions of the Act without any notice of demand to the assessee. While charging sections create tax liability, the machinery provisions quantify the liability and provide for recovery. Section 13(3) of the Act and rule 18(4) contemplate best judgment assessment when no return is filed within the prescribed period or if the return submitted by an assessee appears to the assessing authority to be incomplete or incorrect. When a best judgment provisional assessment is made a reasonable opportunity is to be given to the assessee before making assessment and the demand notice in form "B2" which gives 30 days time to make payment shall be served on the dealer. Unless the return submitted on the face of it appears incomplete or incorrect there is no duty cast on the assessing officer to make enquiry and resort to best judgment assessment. Thus, where classification, name of the commodity, etc., have been given correctly and there is mistake in the rate of tax or in the calculation of amount there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he period of default is not more than a month, no interest shall be paid: Provided further that where a dealer or person has preferred an appeal or revision against any order of assessment under this Act, the interest payable under this sub-section, in respect of the amount in dispute in the appeal or revision, shall be postponed till the disposal of the appeal or revision, as the case may e, and shall be calculated on the amount that becomes due in accordance with the final order passed on the appeal or revision as if such amount had been the subject matter of the appeal or revision. Section 24(3-A): Where a dealer submits the prescribed return within ten days after the expiry of the prescribed period, he shall also pay, in addition to the amount of tax due as per his return, interest at two per cent of the tax payable for every month or part thereof. Section 24(4): Where the tax paid under this Act is found to be in excess on final assessment or revision of assessment, or as a result of an order passed in appeal, revision or review, the excess amount shall be refunded to the dealer after adjustment of arrears of tax, if any, due from him. Where the excess amount is not refu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn should be accepted and in such cases the dealer in addition to tax due should pay penal interest as contemplated in section 2 4(3)of the Act. In other cases, best judgment provisional assessment demand created will stand notwithstanding filing of the prescribed return after a delay of more than 10 days. 24. Section 24(4) of the Act contemplates refund of the excess amount on final assessment or revision of assessment after adjustment of arrears of tax, if any, due from the dealer and payment of interest on refund due where there is a delay of more than 90 days from the date of order of assessment or revision of assessment, etc. 25. Now let us consider what is the implication of the judgment of this Court in the case of LARSEN AND TOUBRO LIMITED VS. STATE OF TAMIL NADU ( 1993 (88) STC 289), which struck down rules 6A and 6B of the Rules and the scope of the retrospective insertion of Section 3-B by Act 25 of 1993 as regards the liability of works contract. This Court in Larsen and Toubro case, while upholding the validity of Tamilnadu Act 42 of 1986 struck down Rules 6A and 6B of the Rules and summarised the findings as follows: "38. For all the reasons stated above, we su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 with reference to this retrospective legislation, not only for tax, but also for interest. 27. The learned counsel for the petitioner relied on the decision of the Supreme Court in J.K.SYNTHETICS LTD. Vs. COMMERCIAL TAX OFFICER ( 1994) 94 STC 422(SC) to contend that even in a case where the dealer who has opted for self assessment under Section 13(2) files a return which may latter be found to be incorrect or incomplete such dealer would not be liable to pay interest for any amount in excess of what it had admitted to be the turnover exigible to tax. In J.K. Synthetics case, the majority decision of the Supreme Court in the case of Associated Cement Co. Ltd. vs. Commercial Tax Officer (1981) 48 STC 466 was overruled and the minority judgment of Bhagwati, J was approved. The minority decision was to the effect that one must look at the return actually filed by the assessee in order to see what is the full amount of tax due on the basis of such return. It is not the assessed tax nor is it the tax due on the basis of a return which ought to have been filed by the assessee but it is the tax due according to the return actually filed that is payable under sub-section (2) of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was valid the tax was payable on the turnover. It was the constitutional validity of section 6B which was challenged by the appellants in the earlier writ petitions before the Calcutta High Court and which finally ended up in upholding of its validity. Hence, there was no question of the assessee waiting for the determination and the turnover as there was no dispute on that aspect. The fact that appellants questioned the constitutional validity of the charging provision cannot be equated with a dispute whether the freight paid would also form part of the sale amount. It was a highly debated dispute whether price amount would envelope the freight charges paid by the dealer and until the controversy was resolved by the court in Hindustan Sugar Mills Ltd. Vs. State of Rajasthan (1979) 43 STC 13 (SC); (1978) 4 SCC 271 the dealers were justified in excluding the freight charges from sale price. It was for that reason the Constitution Bench refrained from mulcting the taxpayer with liability to pay interest additionally. Appellants in these cases have never disputed that they are liable to pay tax on the turnover under section 6B of the Act even while they focussed on the vires of that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d finally CHENGALVARAYAN CO-OPEATIVE SUGAR MILLS LTD VS. STATE OF TAMIL NADU (1997) 105 STC 497 and ultimately the decision of Chengalvarayan Cooperative Sugar Mills was affirmed by the Supreme Court inE.I.D. PARRY (I) LTD. vs. ASSISTANT COMMISSIONER FO COMMERCIAL TAXES (2000) 117 STC 4 57. In the case of STATE OF TAMIL NADU VS. MADURANTAKAM CO-OPERATIVE SUGAR MILLS (1976) 38 STC 238, this court made a distinction between the amount paid for transportation when paid to the grower and when paid to the third party transporter and held that when payment was made to the grower it did not form part of the turnover, 33. In Kallakurichi Co-operative Sugar Mills Limited Vs. State of Tamilnadu ( (1985) 60 STC 113) and as also in Perambalur Sugar Mills Ltd. vs. State of Tamil Nadu ((1992) 86 STC 17), it was held that the whole of the transport charges whether to be paid to the grower or to a third party transporter was includible in the turnover. 34. A Division Bench of this Court in the year 1995 confronted with a conflict among the rulings and this Court in the above case referred the matter to the Full Bench and ultimately the Full Bench delivered its judgment on July 24, 1996 approvi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s granted injunction restraining the State from recovering the tax amount as per section 6B would raise a presumption that the court was then satisfied of the bona fides of the contention is too fragile for depriving the State of the statutory right of interest incorporated in section 10-A of the Act. Interim orders are passed by the High Court on a variety of considerations, one among being the strained financial position of the person approaching the court. Merely because the court granted interim orders it cannot be inferred that court was then satisfied of a strong prima facie case for the appellants. On the contrary, it is well nigh settled that there is always a presumption in favour of constitutionality of a legislative act. The presumption cannot be the other way around." 36. The other decision relied on by the counsel for the petitioner is in the case of FOOD CORPORATION OF INDIA VS. STATE OF HARYANA ANOTHER (2000)119 STC 1. In that case, the imposition of sales tax by the State of Haryana on levy transaction undertaken by the assessee in the year 1973 was declared to be beyond the constitutional authority of the State by the High Court and consequently quashed the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id to be a valid demand and consequently, the interest claimed based on the invalid demand cannot be sustained. The facts of the above case are totally different from the facts of the present case. Section 3-B was never struck down and was in the statute book all along. The Court never declared that the Revenue is incompetent to levy tax on works contract at any point of time rather this Court saved the levy in Larsen and Toubro case. Hence we are of the view that the said case also would not advance the case of the petitioner herein. 38. The learned counsel relied on the decision of the Supreme Court in the case of COMMISSIONER OF INCOME TAX, BHOPAL VS. HINDUSTAN ELECTOR GRAPHITES LTD., INDORE (2000 (3) SCC 595). In that case the assessee filed its return of income under Section 139 of the IT Act, 196 1 on 29.12.1989. In the relevant previous year it had received certain sum by way of cash compensatory support. Since the law as it was then in force, the said amount was not taxable the same was not included in the return. Subsequently the Finance Act 1990 introduced Section 28(iii)(b) in the IT Act and made cash assistance received from the Government of India taxable. On 5.5.199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld in the case of ROYAL BOOT HOUSE VS. STATE OF J K AND OTHERS reported in (1984) 56 STC 213 that sub-section (3) of Section 8 of the J K GST Act provides that tax due on the basis of quarterly return shall be paid before the expiry of the last date of filing of such return and the amount of tax thus becomes payable at the latest from the expiry of the last date of filing quarterly return. Hence under sub-section (2) the dealer would be liable to pay interest on the amount of tax from the date when it was payable i.e from the expiry of the last date of filing quarterly return of the Act. Sub-section (2) refers to the notice of demand but that obviously relates to sub-section (1) where notice of demand is required to be issued after the assessment of tax is completed and the amount of tax assessed becomes due only after the issue of notice of demand as provided under in sub-section (1) but there is no such requirement in the case of payment of tax on the basis of quarterly return to be filed by the dealer. 41. The Division Bench of this Court in the case of APOLLO TUBES LIMITED VS. ADDITIONAL DEPUTY COMMERCIAL TAX OFFICER, RANIPET ANOTHER (1994) 93 STC 339, while considerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax-paid receipt. Hence, it does not mean that the return can be filed later than 20th of the succeeding month. The tax can be paid earlier to the filing of the return, but in either case it shall not be later than 20th of the succeeding month." The very same Division Bench while construing the very provision i.e Section 13(2) and Rule 18 of the TNGST Act and Rules respectively has held that the liability to pay interest under Section 24(3) is automatic and absolute from the date on which it becomes due and the question of bonafide on the part of the dealer or the dealer voluntarily filing a revised return after the due date showing the actual turnover is not at all relevant for deciding the liability of defaulting dealer to pay interest under Section 234(3) of the Act in the case of GODREJ BOYCE MANUFACTURING CO. LTD., VS. JOINT COMMISSIONER OF COMMERCIAL TAXES IV AND OTHERS reported in (1995) 97 STC 44. 43. In a similar factual situation a Division Bench of this Court in which one of us (KRP,J.) was a party in ASHOK LEYLAND LIMITED VS. ASSISTANT COMMISSIONER (CT) AND ANOTHER (2002) 127 STC 73) though the case was concerned with reference to Section 3A of the TNGST ACT in al ..... 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