TMI Blog2018 (4) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to pay interest. The law does not envisage assessee to predict final assessment and expecting to pay tax on that basis to avoid the liability to pay interest - demand of interest and recovery thereof is unsustainable in law - Petition allowed - decided in favor of petitioner. - Writ Petition No.1744/2015 - - - Dated:- 23-11-2017 - Shri S.K. Seth and Smt. Anjuli Palo, JJ Shri G.N. Purohit, Senior Advocate with Shri Abhishek Oswal, Advocate for the petitioner. Shri Deepak Awasthi, Deputy Advocate General for the respondents/State ORDER The short question that falls for our consideration is whether the petitioner is liable to pay interest under section 18(4)(a) of the M. P. V. A. T. Act, 2002 for the assessment year 2011-12 ? 2. Brief facts, which are not disputed and necessary for the disposal of the present petition are as under: 3. The petitioner is a registered dealer and is wholly owned and controlled by the Central Government as an Oil Marketing; Company. Petitioner is engaged in the business of refining and distribution of Petroleum products, that is to say H. S. D., Motor Spirit, L. P. G., Kerosene and other petroleum products. In the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy of interest is unsustainable in view of the Constitutional Bench decision of the Supreme Court;in the case of J. K. Synthetics Ltd. v. Commercial Taxes Officer reported in [1994] 94 STC 422 (SC). 10. For ready reference, section 18(4) (a) of the MPVAT Act is reproduced hereinbelow: 18(4) (a) If a dealer required to furnish return under sub-section (i) fails to pay the amount of tax payable according to a return for any period in the manner prescribed under sub-section (2) of section 24; or (ii) furnishes a revised return under sub-section (2) showing a higher amount of tax to be due than was shown by him in the original return; or (iii) fails to furnish return; or (iv) has furnished return or returns and the tax paid along with the return or returns is less than the tax as per accounts. such dealer shall be liable to pay interest in respect of,- (1) the tax payable by him according to the return; or (2) the difference of the amount of tax payable according to the revised return; or (3) the tax payable for the period for which he has failed to furnish return; or (4) the amount of tax by which tax so paid along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng as the assessee pays the tax which according to return is due on the basis of information furnished in the return filed by him, there would be no default on his part to meet the statutory obligation and therefore, it cannot be held that the tax payable by him is not paid to make him liable to pay interest. 12. Their Lordships' of the Supreme Court while dealing with the provisions of the Rajasthan Sales Tax Act in J. K. Synthetics Ltd. [1994] 94 STC 422 (SC) has observed as under (pages 428 to 433, 436 and 437 in 94 STC): 7. Now section 7(2) says that every 'such' return, meaning thereby the return referred to in section 7(1), shall be accompanied by a receipt showing the deposit of the full amount of tax due 'on the basis of the return'. In other words the dealer is required to pay the full amount of tax that becomes due on the basis of the particulars in regard to the turnover and taxable turnover disclosed in the return. Sub-section (2A) begins with a non obstante clause, namely, notwithstanding anything contained in sub-section (2), and provides that any dealer or class of dealers specified in the notification may pay the tax at intervals sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y not be permissible, recovery of interest on unpaid tax amount may still be justified. 8.....However, according to section 11B substituted by Act 4 of 1979 with effect from April 7,1979, the liability to pay interest accrues (a) where the dealer has furnished returns but has failed to pay the tax as per the said returns or within the time allowed; (b) where a dealer has furnished a revised return under section 7(3) where under the amount of tax payable is larger than that already paid; (c) where a dealer has filed his return after expiry of the prescribed period but has not paid the tax as per return or within the time allowed; (d) where a dealer is required to pay tax without furnishing a return for any period and such tax is not paid in full by the due date; (e) where a dealer required to furnish returns pap tax for any period without furnishing returns; and (f) where the liability to pay tax is quantified in respect of a dealer who had submitted returns for the period for which the tax is quantified. It will thus be seen that under section 11B before the 1979 Amendment the liability to pay interest on unpaid tax amount accrued on the dealer in two situations only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay interest on the balance tax if the tax assessed under section 10 is higher than what was provisionally assessed. He can always claim that he cannot be made liable to pay interest for the error of the authority in making the provisional assessment under section 7A. The defaulter would be in a better position than a dealer who complies with the requirement of section 7(1). And if he can show reasonable cause, he would also escape the penalty clause in sections 7AA and 16(1). More or less a similar situation may arise in the matter of payment of interest where provisional assessment is made under section 7B. Of course such a dealer may become liable to penalty but that is a different matter altogether. Take also the case of a dealer who submits a return without depositing the tax on the basis thereof. Under rule 25(4) the authority may or may not take cognizance of the return. If cognizance is not taken the dealer would be treated on a par with one who has not submitted a return but if cognizance is taken he must be treated as one who is liable to pay interest under clause (a) of section 11B of the Act. Therefore, the view canvassed by the Revenue leads to incongruous situations wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of tax, including penal provisions meant to deal with defaulters. Provision is also made for charging interest on delayed payments, etc. Ordinarily the charging section which fixes the liability is strictly construed but that rule of strict construction is not extended to the machinery provisions which are construed like any other statute. The machinery provisions must, no doubt, be so construed as would effectuate the object and purpose of the statute and not defeat the same. (See Whitney v. IRC [1926] AC 37; 42 TLR 58, Commissioner of Income-tax v. Mahaliram Ramjidas [1940] 8 ITR 442 (PC); AIR 1940 PC 124; 67 IA 239, India United Mills Ltd. v. Commissioner of Excess Profits Tax, Bombay [1955] 27 ITR 20 (SC); [1955] 1 SCR 810; AIR 1955 SC 79 and Gursahai Saigal v. Commissioner of Income-tax [1963] 48 ITR (SQ 1; [1963] 3 SCR 893; AIR 1963 SC 1062). 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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