TMI Blog2004 (7) TMI 613X X X X Extracts X X X X X X X X Extracts X X X X ..... licant adjusted the aforesaid amount of Rs. 36,000 towards the admitted tax payable by him in the following manner: 1. Towards tax of January, 1983 (U.P.) Rs. 2,548.09 2. Towards tax of January, 1983 (Central) Rs. 12,356.59 3. Towards tax of February, 1983 (Central) Rs. 21,045.32 Total Rs. 36,000.00 3. The adjustment was claimed, as stated above on the assumption that the department has failed to initiate and complete the penalty proceedings within the period of three months. However, the aforesaid adjustment as claimed by the dealer in the monthly returns of January and February (U.P.) and (Central) was not disputed by the department at that stage. Subsequently the assessment orders for the assessment years 1982-83 (U.P.) and (Central) were passed on September 30, 1986. The department also converted the security amount of Rs. 36,000 into penalty with the result the dealer on January 7, 1987 deposited Rs. 36,000, which was earlier adjusted towards the admitted tax liability for the months of January and February (U.P.) and (Central). The assessing authority by two miscellaneous order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o pay tax under the Act, to submit such returns of his turnover at such intervals within the prescribed time in the prescribed manner. Such dealer is also required to deposit in the prescribed manner the amount of tax due on the turnover shown in such return. Section 8(1) of the Act provides for payment of tax admittedly payable by such dealer within the prescribed time. For failure to deposit the tax admittedly payable on such return, interest would have to be paid at the rate of 2 per cent per annum. Thus, the State Government is empowered by the Legislature to raise revenue through the mode prescribed in the Act so that the State should not suffer on account of delay, caused by the tax-payers in payment of tax. The provision for charging the interest obviously has been made in order to compensate the State (or the revenue) for the loss occasioned due to delay in paying the tax [Vide Commissioner of Income-tax v. M. Chandra Sekhar [1985] 151 ITR 433 (SC); (1985) 1 SCC 283 and Central Provinces Manganese Ore Co. Ltd. v. Commissioner of Income-tax [1986] 160 ITR 961 (SC); 1986 UPTC 1251 (SC)]. The Supreme Court while interpreting the similar provisions with reference to the Bengal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der to compensate the revenue for the loss caused to it due to delay in deposit of tax. It is also firmly established that the charge of interest is not by way of penalty. The Supreme Court in the case of Central Provinces Manganese Ore Co. Ltd. [1986] 160 ITR 961; (1986) 3 SCC 461; AIR 1987 SC 438, with reference to sub-section (8) of section 139 of Income-tax Act has held that the interest is levied by way of compensation and not by way of penalty. The interest is levied under sub-section (8) of section 139 and under section 215 of the Income-tax Act because by reason of omission or commission penalty mentioned in the relevant provision. The revenue is deprived of the benefit of the tax for the period during which it has remained unpaid. Interest under section 139(8) of the Income-tax Act is payable if a return is not furnished at all or not furnished in time. A Constitution Bench of the Supreme Court has considered the aforesaid two cases with reference to Rajasthan Sales Tax Act in the case of J.K. Synthetics Ltd. v. Commercial Tax Officer [1994] 94 STC 422 (SC); AIR 1994 SC 2393. It has been held that the statutory provision authorising the State or the Revenue to charge inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hever period was later. This section enables the dealer to claim refund even of an amount which he had paid prior to the assessment made by the assessing authority in case it was found to be in excess of the amount eventually assessed against him. But then such amount or any amount directed to be refunded by the appellate or the revisional authority could be refunded only if an application for the purpose was made by him. See Indodan Milk Products v. State of U.P. 1983 UPTC 583. 12.. A division Bench of this Court in Dhingra Mechanical Works v. Commissioner of Sales Tax, U.P. [1972] 29 STC 238; 1971 UPTC 821 has held that when a tax liability is to be discharged by an assessee, he can ask the Sales Tax Officer to adjust against any such liability any amount which may be refundable to him. Under proviso to section 29 there is a provision for automatic adjustment. 13.. The initial order of penalty converting the security amount into penalty has been set aside by this Court, as stated above. The net effect is that the penalty order ceased to exist and it has merged into the order of the High Court, holding that no penalty could be levied. This aspect of the case was not considered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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