TMI Blog2001 (12) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... while deciding this group of 29 petitions. D.B. Civil Writ Petition No. 4674 of 2001: 2.. The petitioner-company is registered under the Rajasthan Sales Tax Act, 1994 and the Central Sales Tax Act, 1956 and the Assistant Commissioner, Rajasthan, Kar Bhavan, Jaipur, is the assessing authority. Their assessment for the assessment year 1996-97 under section 9 of the Central Sales Tax Act, 1956 (hereinafter referred to as "the Central Act") read with section 29 of the Rajasthan Sales Tax Act, 1994 (hereinafter referred to as "the State Act") was made on March 22, 1999 and by passing the assessment order, additional demand was created and it is the case of the petitioner that the same had been deposited. The petitioner has set up the case that the interest can be levied and charged on delayed payment of tax only if the statute that levies and charges the tax, makes a substantive provision in this behalf. It is the case of the petitioner that earlier the assessing authorities were levying interest under the Central Sales Tax Act, as it then was, and that a question came up for consideration before the honourable Supreme Court in the case of India Carbon Ltd. v. State of Assam reporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of section 9 of the Central Sales Tax Act, 1956 (hereafter in this section referred to as the Central Sales Tax Act), shall have effect, and shall be deemed always to have had effect, as if that section also provided (a) that all the provisions relating to interest of the general sales tax law of each State shall, with necessary modifications, apply in relation to (i) the assessment, reassessment, collection and enforcement of payment of any tax required to be collected under the Central Sales Tax Act, in such State; and (ii) any process connected with such assessment, reassessment, collection or enforcement of payment; and (b) that for the purposes of the application of the provisions of such law, the tax under the Central Sales Tax Act shall be deemed to be tax under such law. (2) Notwithstanding anything contained in any judgment, decree or order of any court, Tribunal or other authority, general sales tax law of any State imposed or purporting to have been imposed in pursuance of the provisions of section 9 of the Central Sales Tax Act, and all proceedings, acts or things taken or done for the purposes of, or in relation to, the imposition or collection of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough clause 119 of the Act of 2000 is prospective in nature but the validation provision contained in clause 120 of the Act of 2000 particularly sub-clause (2) has been given retrospective effect. According to the petitioners, the Parliament has deliberately inserted sub-section (2B) in section 9 of the Central Act vide clause 119 of the Act of 2000 prospectively with effect from May 12, 2000 though the Parliament could very well have inserted the said sub-clause retrospectively. That sub-section (2B) was intended to be inserted in section 9 prospectively. The reference has been made to clauses 115 and 116 of the Finance Bill, 2000. It is mentioned that these have to take effect on that date when the Finance Bill, 2000 receives the assent of the President. However, it is not disputed that the presidential assent was accorded on May 12, 2000. Clause 116 seeks to provide for validation of the provisions of section 9 of the Central Act as amended by clause 115. After the insertion of section 9(2B) in the Central Act, the respondent-assessing authority passed an order on June 1, 2001 under section 58 of the State Act read with section 9 of the Central Act, levying interest of Rs. 9,33, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax liability for the year 1992-93, vide, order dated February 20, 1996. The original assessment was made by the department against the petitioner-company and the balance demanded after adjustment of advance tax as against the petitioner-company was Rs. 3,44,88,800. The aforesaid amount was based on a tax for non-submission of form "C" under the State Act in an amount of Rs. 1,63,12,211 with interest of an amount of Rs. 1,33,76,073. The demand of both principal amount and interest in respect of form "C " was subject to submission of form "C" within a period of six months as permissible under the Act and Rules. Further components in the balance demanded pertaining to assessment year 1992-93 was by way of a demand for Rs. 1,13,725 as interest on delayed payment. 8.. In this case also a reply dated August 3, 2001 has been filed and on that basis the prayer has been made as already pointed out earlier. 9.. The matter has been seriously argued before us by the learned counsel appearing on behalf of the petitioner and it has been submitted that even the validation clause as has been enacted in the Act of 2000 does not cure the defect nor does it seek to authorise the authorities to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iving retrospective effect indefinitely is violative of the Constitution of India. That without any substantive provision in the Act the validation clause cannot authorise the assessing authority to charge interest. That the validating clause has been challenged and according to the learned counsel for the appellant the remedy of appeal is not an appropriate remedy as the appellate authority is not competent to adjudicate the validity of the section. Mr. Singhal in support of his submission has relied upon the following decisions: State of Tamil Nadu v. Thirumagal Mills Ltd. [1972] 29 STC 290 (SC), Bengal Paper Mills Co. Ltd. v. Commercial Tax Officer [1976] 38 STC 163 (Cal), Commissioner of Income-tax v. Sardar Lakhmir Singh [1963] 49 ITR 70 (SC), Gadgil (S.S.) v. Lal and Co. [1964] 53 ITR 231 (SC), Jani (J.P.), Income-tax Officer v. Indu Prasad Dev Shanker Bhatt [1969] 72 ITR 595 (SC), Warangal District Co-operative Marketing Society Ltd. v. State of Andhra Pradesh [1983] 54 STC 385 (AP), Commercial Taxes Officer v. Zoraster Co. [1993] 89 STC 462 (Raj), State of Rajasthan v. Ghasilal [1965] 16 STC 318 (SC), Associated Cement Co. Ltd. v. Commercial Tax Officer [1981] 48 STC 46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in tax liability by the department vide order dated December 2, 1998 for a sum of Rs. 7,53,345 and the assessing authority found a sum of Rs. 12,54,504 refundable to the petitionercompany. On March 31, 2000 the amount of Rs. 9,21,729 was allowed by way of adjustment against other liability of the petitioner-company to Sales Tax Department. Consequent to the Act of 2000 to validate the chargeability of interest of the late payment of Central sales tax, resorting to sections 17/37 and 58 of the Act of 94 read with section 9 of the Central Sales Tax Act, 1956 and the presumptive interpretation of section 120 of the Finance Act, 2000, the petitioner-company was arbitrarily found to be liable for a sum of Rs. 13,79,572 as tax pertaining to year 1993-94. Accordingly notice of deposit was issued on January 1, 2001. On February 12, 2001, the petitioner-company submitted a representation and thereafter on March 13, 2001, the Assistant Commissioner (Special Circle), Rajasthan, under section 53 of the Act of 94 read with section 9 of the Central Sales Tax Act, 1956 required the petitioner-company to deposit the aforesaid amount of Rs. 13,79,572, failing which proceedings for attachment and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended that the demands for interest in terms of provision of section 119 and section 120 of the Finance Act cannot be made by way of rectification beyond the limitation provided under section 37 of the Rajasthan Sales Tax Act. Rectification could be made only within the period of three years from the original order of assessment on February 20, 1996 and if the rectification order was passed within a period of four years from the date of original assessment. It was submitted that in the instant case the purported order of rectification passed on January 1, 2001 is beyond the limitation, therefore, vitiated under sub-sections (2) and (4) of section 37. That original order of assessment in the instant case was passed on February 20, 1996 and made in favour of the assessee by way of rectification cannot extend the period of limitation. 17.. It was further submitted that even the amendment and validation of the Finance Act, 2000 could not override the limitation to levy interest as set out in clause (b) of sub-section (2) of section 70 of the Rajasthan Sales Tax Act. The submission has been made that demand amount of CST was paid in full in 1996 itself and therefore, no amount on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e substantive in nature. In penalty the assessing authority has the discretion to levy or not to levy while in interest no such discretion is there and as such the Legislature has inserted the substantive provision of interest prospectively. 6.. That no notice could be issued after expiry of two years for charging interest after completion of the assessment under section 70(2) of the RST Act and the Parliament has not lifted this ban of limitation. 20.. He has relied upon the case of K. Sankaran Nair in (1996) 11 SCC 428 and the principle laid down therein that, unless the Legislature by enacting a competent legislative provision retrospectively removes the substratum or foundation of any judgment of a competent court the said judgment would remain binding and operative. In the case of Bhubaneshwar Singh reported in (1994) 6 SCC 77 it has been held that any action in exercise of the power under any enactment which has been declared to be invalid by a court cannot be made valid by a validating Act; by merely saying so, unless the defect which has been pointed out by the court is removed with retrospective effect. 21. In the case of State of Tamil Nadu v. M. Rayappa Gounder r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t levy of interest would also be unsustainable, therefore by Central Sales Tax (Amendment) Act, 1976 section 9 was amended and the words, "charging for payment of interest" was inserted with retrospective effect and a validation section with regard to interest was also introduced. However, in India Carbon Ltd. v. State of Assam [1997] 106 STC 460 (SC) it was held that there is no substantive provision in the Central Act regarding charge of interest and as such no interest can be charged under the Central Sales Tax Act, 1956. Thus the decision of the Supreme Court in India Carbon Ltd. v. State of Assam [1997] 106 STC 460 the Parliament has not introduced section 9(2B) and by para 120 retrospective effect has been given to the sales tax. That section 120 of the Finance Act, 2000 clearly provides that the provision of section 9 of the Central Sales Tax Act, 1956 shall have effect and shall be deemed always to have effect. This clearly makes the provision of section 9 with regard to interest as retrospective. This section also provides that it should be presumed that section 9 also provided for levy of interest. Similar language was used to overcome the judgment of the honourable Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endment was made with regard to the charging of interest but it was in the procedural part of the provisions and that too was not considered by the Supreme Court for the purpose of charging interest as no charging section was there in substantive provisions. Thereafter, amendment was made and the interest was included in the substantive provisions. The history of these provisions along with the decisions rendered by the Supreme Court to which the reference has been made hereinabove, makes it clear that the provisions as such are not open to challenge and these provisions do not suffer from any unconstitutionality whatsoever. 28.. The learned counsel for the petitioners are right in raising this contention as a proposition of law that unless the provisions with regard to the validation are given retrospective effect, they cannot be held to be sufficient so as to cover the defect. It is trite law that such validating amendment only remains the basis or the bedrock of the principles on which the decisions are rendered by the Supreme Court but so far as the legislative competence to enact the provisions is concerned the same is not in question and the first part of the amendment make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he expiry of four years from the date of order sought to be rectified. However, we find that these provisions have to be given effect to but as and when there is an amendment in law which is retrospective in nature and it is on account of some amendment in law that the rectification becomes necessary, the amendments in law cannot be given a go-bye and they too have to be taken into consideration. More particularly when these amendments with retrospective effect coupled with the validation clauses are there. We have not been able to persuade ourselves to agree to the contention which has been raised that the amendment in validation brought out by the Finance Act, 2000 could not override the limitation to interest. We may straightway refer to sub-clause (d) of clause 120(2) which reads as under: "Any proceeding, act or thing which could have been validly taken, continued or done, for the imposition or collection of such interest at any time before the commencement of this section if the provisions of sub-section (1) had then been in force but which had not been taken, continued or done, may, after such commencement, be taken, continued or done." 30.. The learned counsel for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll also be considered by the concerned authority for passing a speaking order. 32.. The other contentions which were raised that no further interest could be charged on interest when the demand for payment of interest came into existence only on January 1, 2001 following the Finance Act. In our considered opinion this contention has substance and we find that as a question of law there is no problem with regard to the demand for payment of interest prior to the date on which the demand is raised. However, what is the relevant date in such case and the question of interest will depend on the actual date on which the demand is raised. There is no question of charging interest on interest. In case any amount has been deposited and the same has remained with the department, there is no question of charging interest on such amount. In the instant case a grievance has been raised in this regard that the amount has been deposited and later on refund order has also been passed and yet on that very amount the demand with regard to the interest has been raised. If that be so the concerned authorities would reconsider this matter and depending upon the facts of each case, it will be decided ..... X X X X Extracts X X X X X X X X Extracts X X X X
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