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Annapurna Biscuit Manufacturing ... vs The State Of Uttar Pradesh And Anr.

High Court Of Judicature at Allahabad|22 October, 1980

JUDGMENT / ORDER

JUDGMENT R.M. Sahai, J.
1. In these petitions directed against levy of interest under the Sales Tax Act, the primary controversy centres round the interpretation of the expression "tax admittedly payable under the Act" in Sub-section (1) of Section 8 introduced since 1975. Imposition of interest in fiscal statutes, in recent years is a normal feature to compensate the revenue for its loss due to delayed payments on one pretext or the other. In the Sales Tax Act it was introduced for the first time in 1964 when Sub-section (1-A) was added to Section 8 providing for payment of interest if tax assessed, reassessed or enhanced remained unpaid for six months from the date of service of notice of demand. While considering this provision the Honourable Supreme Court in Haji Lal Mohd. Biri Works v. State of U. P. 1973 UPTC 690 (SC) observed :
The above provision was apparently added with a view to tighten up the machinery for collection of sales tax and as a deterrent measure so that the dealers may not evade or delay the payment of tax.
2. With increase in rate of tax and growth in volume of business the tendency of withholding tax realised from customers on behalf of the Government, of which the dealer thus became custodian only, increased and it began to be utilised as capital for as long as possible either under the cover of disputed tax or in lieu of stay orders granted by this Court, State Government or authorities under the statute itself. In order to curb this tendency and tighten the collection machinery further Sub-sections (1) and (1-A) of Section 8 were substituted by Sub-sections (1), (1-A), (1-B) and (1-C) of Act 23 of 1975. In order to understand the scheme of payment of interest since 1975 and appreciate the rival submissions made by the learned counsel for the parties, Sub-sections (1), (1-A) and (1-B) as far they are relevant are extracted below:
8. Payment and recovery of tax.-(1) The tax admittedly payable shall be deposited within the time prescribed or by the thirty-first day of August, 1975, whichever is later failing which simple interest at the rate of two per cent for every month or part thereof shall become due and be payable on the unpaid amount with effect from the day immediately following the last date prescribed or with effect from the first day of June, 1975, whichever is later and nothing contained in Section 7 shall prevent or have the effect of postponing the liability to pay such interest.
Explanation.-For the purposes of this sub-section, the tax admittedly payable means the tax which is payable under this Act on the turnover of sales or, as the case may be, the turnover of purchases, or of both, as disclosed in the accounts maintained by the dealer or admitted by him in any return or proceeding under this Act, whichever is greater, or, if no accounts are maintained, then according to the estimate of the dealer.
(1-A) The tax assessed under this Act shall be deposited in the manner specified in, and within thirty days of the service of, the notice of assessment and demand.
(1-B) If the tax assessed, reassessed or enhanced by any authority or court remains unpaid for three months after the expiry of the period specified in the notice of assessment and demand or from the date of the order of enhancement, as the case may be, simple interest on the unpaid amount shall become due and be payable as hereinafter specified-
(i) on the amount referred to in Sub-section (1), at the rate specified in that sub-section; and
(ii) on the amount, if any, in excess of that referred to in Sub-section (1), at the rate of one and one half per cent for every month or part thereof :
Provided that-
(a) ...
3. Interest is now payable both before and after assessment. For the former liability accrues under Sub-section (1) if the dealer fails to deposit tax admittedly payable within the time specified or 31st August, whichever is later. What is tax admittedly payable has been explained in the explanation and it means "tax payable under the Act on turnover of sales or purchases". After assessment if tax assessed, reassessed or enhanced is not paid within three months of the period specified in the notice of demand the dealer becomes liable to pay interest on tax admittedly payable at two per cent and on balance at one and half per cent. The retention of distinction between tax admittedly payable and tax in excess in sub-clauses (i) and (ii) of Sub-section (1-B) even after assessment and levy of interest on the former at higher rate makes it necessary to examine the meaning of the expression "tax payable under the Act". An attempt was made on behalf of the petitioner to equate it with "tax admitted" in the proviso to Section 9 and it was urged that the interpretation given by this Court in Commissioner of Sales Tax v. Bishambhar Dutt Mohan Lal 1979 UPTC 801 should be applied and the expression should be understood in the same sense. The learned counsel relied on similarity of language in the two sub-sections and placed the following comparison :
Explanation to Section 8(1).-...the tax admittedly payable means the tax which is payable under this Act on the turnover of sales or, as the case may be, the turnover of purchases, or of both...admitted by him in any return or proceeding under this Act, whichever is greater, ...
Proviso (a) to Section 9(1).-...the amount of tax or fee due under this Act on the turnover of sales or purchases, as the case may be admitted by the appellant in the returns filed by him or at any stage in any proceeding under this Act, whichever is greater.
4. It is true that the phraseology of explanation and the proviso to Section 9(1) are more or less same except that the word "payable" has been used in Section 8(1) whereas in the proviso the word used is "due". All the same it is not possible to accept the submission that the expression "tax payable under the Act" means the same thing as tax admitted by the appellant to be due. The explanation is a positive departure from the concept of "admitted tax" although in ultimate analysis there may remain very little distinction in the two as even admitted tax has been interpreted to mean tax which is payable in accordance with the Act, Rules or notifications issued under it.
5. From various assessment orders also which are under challenge it appears that the assessing authorities are construing "tax admittedly payable under the Act" as tax finally determined. In doing so they cannot be blamed as the use of the expression is not very happy and it is susceptible to that construction. As a matter of fact the entire Sub-section (1) has been very clumsily drafted. For if the intention was to provide for payment of interest on tax which was admitted but not paid it was unnecessary to use all the language and then explain it by an explanation. And if the intention was to equate it with tax finally determined or found there was no difficulty in saying so plainly. From the explanation it appears that the turnover has to be determined by the dealer and rate has to be applied as provided in the Act, Rules or notifications and tax worked in this manner becomes tax payable under the Act. In Section 3 which is the charging section it has been provided since 1971 subject to the provisions of this Act every dealer shall for each assessment year, pay a tax at the rates provided by or under Section 3-A, 3-AB, 3-AA or 3-D on his turnover of sales or purchases. Even in form IV in which the dealer files return he has to disclose tax payable, tax realised and admitted tax "payable under the Act" therefore means nothing except that tax calculated on the rates provided in the notification. To this extent there appears to be no difficulty. But difficulty arises when tax payable under the Act or notification is varied due to retrospective legislation or judicial interpretation or due to failure to perform certain conditions. How should it be understood then ? For instance a commodity is taxable under a certain notification. The dealer calculates tax on the notification and deposits the same. After seme time the rate is enhanced with retrospective effect. The dealer becomes liable to pay tax on the rate prescribed by the retrospective legislation. But whether this can be considered to be tax payable under the explanation as well ? Similarly a certain commodity is held to be taxable by this Court under a specific entry of a notification. The dealer in subsequent years deposits tax in accordance with it. During pendency of the proceedings the Supreme Court takes a different view either in the case of the assessee or some other dealer and holds that the item is taxable at higher rate under a different notification. What is the tax payable for purposes of Sub-section (1) of Section 8. The tax held payable in earlier years or the tax which should have been paid in view of the pronouncement made by the Supreme Court. Similarly where the assessee deposits tax on lesser rate or claims exemption because the goods have been sold or purchased in circumstances specified in Section 3-AAA, 3-AAAA, 3-D or 4 and files the form prescribed under the Rules but those forms are rejected due to some technical omission. What would be the tax payable, the tax which the dealer was liable to pay after availing benefit of the forms, etc., or the tax which he is required to pay. These illustrations highlight the untold hardship and misery to which a dealer may be put for no fault of his. It is therefore necessary to construe this provision in a manner which may avoid undue harassment of an assessee yet safeguard the interest of revenue against an unscrupulous dealer, particularly when the rate of interest is so high that it may at times result in closure of business.
6. What is required to be deposited under Sub-section (1) is the tax which is payable under the Act on the turnover of sales or, as the case may be, the turnover of purchases or of both as disclosed in the accounts maintained by the dealer or admitted by him in any return or proceedings under the Sales Tax Act, whichever is greater, or if no accounts were maintained, then according to the estimate of the dealer. It has, at this stage, been left to the dealer not only to state his turnover but also to calculate the tax payable on it in accordance with the provisions of the Act. Just as by wrongly disclosing his turnover he cannot escape the liability to pay interest in respect of the tax payable on the turnover disclosed in his account books or admitted by him in any proceedings or as disclosed in his return, whichever happens to be greater, he can also not escape the said liability by wrongly calculating the tax which under the Act is payable on the relevant turnover. However, a dealer cannot be accused of wrongly calculating the tax payable under the Act if he has calculated the same in the same manner in which the Sales Tax Officer himself would have calculated it on the date on which the dealer was required to make the calculation. It cannot be doubted that when the Sales Tax Officer proceeds to determine the tax payable on a particular turnover, he does so in accordance with the interpretation of the statute already made by him or his superior authorities or in accordance with the law as interpreted by the High Court or the Supreme Court. Accordingly, if the dealer calculates the tax payable by him on the relevant turnover in consonance with the decision of the concerned authority or the court which, at the time of making the calculation, held the field, it would not be possible to say that he calculated the tax payable by him wrongly. Indeed the law would expect him to calculate the tax in such a manner and would not penalise him for acting in the manner in which he was expected to act. The dealer while calculating the amount of tax payable by him at a particular time is not expected to anticipate either that the decisions which at that particular time held the field would be reversed or that subsequently the legislature will step in and make an enactment rendering his calculation wrong by making a legislation effective from an earlier date and to make his calculation accordingly. It, therefore, follows that where a dealer calculates the tax payable by him in accordance with the prevailing interpretation on the subject, it would not be possible to say that the same is not the tax payable under the Act. So long as the calculation is in accordance with the Act the dealer cannot be fastened with liability of interest on any amount found in excess due to change in law or its interpretation. Once calculation has been done in accordance with the Act it is not subject to alteration or variation for purposes of payment of interest. It continues to be so till the assessment is made. The point of time when calculation of tax payable has to be made is also important. It holds the key to payability under the Act, as if the calculation is in accordance with the Act and payment is made of it within the time specified there is no liability to pay interest. The liability to pay as a result of the order passed by the authorities is not the same thing as calculation of tax payable by the dealer. Any amount found due apart from it either due to amendment in law or change of view is amount in excess and cannot be considered to be tax admittedly payable for the purposes of Sub-section (1). To find out the time specified the provisions of Section 7 and Rule 41 framed thereunder have to be looked into. A dealer liable to pay tax is required by Section 7(1) to file his return of turnover at such intervals and within such period as may be prescribed. This has been done by Rule 41. Till 1976 it provided for filing of quarterly return. But since 1976 it contemplates monthly return if the turnover of purchases and sales in any assessment year exceeds Rs. two lakhs. In other cases the old scheme of filing returns for the quarters ending on June 30, September 30, December 31 and March 31, within a month has been continued. Before filing these returns the dealer is required by Sub-section (1-A) of Section 7 to deposit the tax due on the turnover shown in such return. Sub-sections (1-B) and (1-C) permit a dealer to file return beyond the prescribed time or revised return but in either case he is liable to pay interest at the rate of two per cent from the date the return was to be filed. The time specified, therefore, before which the calculation has to be done is the time of filing of return. It remains same even where no return is filed or return is found to be incorrect. What has therefore to be seen is whether the determination or calculation of tax payable on this date was in accordance with the Act or not. If it was according to law as it then stood, then it does not alter by subsequent events. The tax determined or calculated by the dealer and tax assessed may differ due to change in law or its interpretation or non-compliance of certain conditions but it does not result in changing the tax payable under the Act for purposes of levy of interest under Section 8(1). For instance, a commodity is taxable under a notification at a particular rate. A dealer carrying on business in it and liable to pay tax has to deposit the tax on its turnover while filing return within the time specified at that rate. If the payment is not made or it is made at lesser rate, the dealer becomes liable to pay interest on it at the rate of two per cent from the date of filing of return or if no return is filed from the date it should have filed till the date of assessment. But the dealer may raise dispute about taxability or about rate ; and then the question may arise what is the tax payable under the Act, that which is calculated or determined by the dealer or that found to be due by the assessing authority. In such cases it is the bona fide of the assessee which shall have to be examined. So long as the calculation is honest and fair the dealer shall not incur any liability to pay interest. The apprehension of the learned standing counsel that if this view is taken no assessee shall deposit any tax and he shall escape liability to pay interest does not appear to be justified. Whether the determination by a dealer was bona fide or not can be easily ascertained on well-settled principles laid down by the Honourable Supreme Court and this Court in numerous decisions. It is true that it shall differ from case to case and may create difficulty at times; but the provisions being well-known and the rate of interest being so high no dealer shall dare take risk for the fun of it. In taking this view we think that the legislative intention of levying interest on those dealers who deliberately omit to deposit the tax payable is effectuated. It also safeguards the interest of honest dealers. These aspects shall further stand highlighted when we take up individual petitioners.
7. It was vehemently argued by the learned counsel for the assessee that irrespective of the view taken on tax admittedly payable, once the assessment order is passed the tax admitted or disputed merges in the assessment order and as under Sub-section (1-B) fresh period of limitation has been provided for payment of tax the assessee gets fresh opportunity to pay tax under the Act and if that is done then there is no default and no interest could be levied. It has been maintained that this provision is to augment the pace of recovery and affords the dealer a fresh opportunity to clear off his liability to save itself from payment of interest. According to the learned counsel it would be reasonable as well because the tax payable under the Act having been finally determined, an opportunity should be afforded to pay and interest should be levied, may be from back date, if the assessee commits default thereafter. An analogy was attempted to be drawn from voluntary tax disclosure scheme under the Income-tax Act. It was also urged that if this interpretation is not accepted then grant of fresh time under Sub-section (1-B) does not make any sense. To emphasise the learned counsel pointed out what shall happen during the period assessment order is passed, demand notice is served and three months time granted for deposit. Will a dealer be liable to pay interest under Sub-section (1) for these months as well ? And if that be so then it makes the position anomalous as after merger of tax admittedly payable in tax assessed and its deposit within three months he cannot be deemed to be defaulter.
8. The submission appears to be devoid of any substance. As seen above the payment of interest before assessment is on unpaid amount of tax "admittedly payable under the Act". This liability does not vanish by assessment. If the interpretation as suggested by the learned counsel is accepted then introduction of Sub-section (1) becomes an exercise in futility. It shall frustrate the legislative intention which is so apparent. An interpretation which renders any provision redundent or inoperative cannot be accepted. Nor is there any rationale in the argument that time granted for deposit of tax assessed is fresh grant of time. The two sub-sections operate in different fields. They do not overlap nor do they deal with the same situation. For purposes of levy and payment of interest the entire period beginning from the date the return of turnover has to be filed or is due to be filed till final payment of tax assessed has been bifurcated into two, one from the date when return becomes due till the date of assessment and the other from assessment till payment. After assessment the liability to pay interest arises if tax assessed is not deposited within three months. The cause of action is the default in payment of tax within the time specified in the notice of demand. It has nothing to do with the default committed by dealer in tax admittedly payable under the Act. The event of assessment order results in ceasure of liability under Sub-section (1) and merger of tax admittedly payable in tax assessed. The grant of three months from expiry of period specified in notice of demand is not fresh opportunity of paying tax admittedly payable not deposited in time but a concession granted to a dealer to arrange payment within another three months to save him from further interest on tax assessed. The benefit thus conferred for tax assessed cannot be construed to mean that if the dealer deposits tax assessed within this extended period his liability to pay interest on unpaid amount of tax admittedly payable under Sub-section (1) comes to an end.
9. In the light of what has been said the facts of each case may now be examined. While doing so the independent arguments raised in them shall also be considered. In C. M. Writ No. 318 of 1979, the petitioner-manufacturer of biscuits, filed its quarterly return for 1974-75 and deposited tax at 2 per cent as it had been held in the earlier years that biscuit was taxable as cooked food. Even on 3rd September, 1976, the revising authority while deciding revisions arising out of the assessment year 1969-70 held in the case of Diamond Biscuit Co. v. State of West Bengal reported in [1955] 6 STC 110 that biscuits were treated like any other kind of cooked food...Even their Lordships of our own High Court treated biscuits as a kind of dry bread in the case of Annapurna Biscuit (Mfg.) Co. v. State of U. P. reported in Taxation Law Diary (Jan 75) 42. It is thus clear that the learned Assistant Commissioner (Judicial) rightly treated biscuits within the category of cooked food. On 2nd August, 1976, this Court in Commissioner of Sales Tax v. Jassu Ram Bakery 1976 UPTC 584 held : "Hence, our answer to the question referred to this Court is that biscuit does not come either under the category of 'cooked food' or 'confectionery'." Following this decision the Assistant Commissioner (Assessment), Sales Tax, by his order dated 28th March, 1979, assessed the petitioner for 1974-75 on the turnover disclosed by it but on the higher rate applicable to unclassified item. Due to variation in rate an additional demand of Rs. 2,46,615.67 was created. Out of this Rs. 2,38,350 was deposited at the time of filing appeal, but within three months of the notice of demand, and for the balance, i. e., Rs. 8,000, stay order was granted by the Deputy Commissioner (Appeals) on 26th April, 1979. By letter dated 31st July, 1976, the Assistant Commissioner (Assessment) directed the petitioner to deposit interest amounting to Rs. 2,17,846.28 on Rs. 2,38,350 for a period of forty six months beginning from 1st June, 1975, to 20th April, 1979. It is against this demand that this petition has been filed. The question is whether this demand is justified. The return for the last quarter ending March, 1975, must have been filed by April. Till that date the law as declared by this Court and understood by the assessee was that biscuit was cooked food. In the return filed it therefore paid tax on the turnover disclosed at two per cent. This determination of tax payable was in accordance with the Act. The petitioner could not be held liable to pay interest on it because subsequently in case of another assessee it was held that biscuit was not cooked food. As seen earlier this may result in tax in excess but it could not render the calculation of tax payable under the Act erroneous or mala fide. At the time of deposit within the time specified the tax admittedly payable on biscuit was two per cent only. It was argued by the learned standing counsel that the effect of the decision given by this Court was that biscuit shall be deemed to have been taxable as unclassified item. And the tax payable under the Act even when return was filed by the petitioner was at the rate provided for unclassified item. In any case the learned counsel argued that once the decision was given then the petitioner shall be deemed to have known it and if despite knowledge or deemed knowledge that the tax payable was at higher rate than two per cent, the petitioner did not pay the same, then it cannot be heard to say that it was not liable to pay any interest on it. We do appreciate the argument advanced by the learned counsel but as pointed out earlier the payability under the Act has to be seen at the time of filing of return and not at any time posterior to it. It is true that the effect of the decision by this Court in 1976 was that biscuit was not covered in the entry "cooked food". But that affects payability of tax on the turnover of sale or purchase of biscuits. It did not affect the calculation of tax payable under the Act earlier. Of course if a dealer carrying on business in biscuits deposits tax at two per cent along with return filed for the quarter after the decision was published and became known then the deposit of tax and its calculation shall not be of tax payable under the Act.
10. In C. M. Writ No. 235 of 1980 the petitioner carried on business of sale of number of items including welding rods. It sold welding electrodes locally purchased from M/s. Indian Oxygen Ltd., Kanpur. In the assessment year 1972-73 it made purchases amounting to Rs. 9,98,596.86 between 1st April, 1972, and 18th January, 1973, and paid tax at 7 per cent to M/s. Indian Oxygen Ltd., as it was treated by the department to fall in the category of electrical equipments taxable at single point. On 15th October, 1973, the assessing authority exempted the turnover as the commodity being taxable at one point the payment of tax at other points was exempt. In Commissioner of Sales Tax v. B. C. M. Franklin and Co. 1972 UPTC 716, it was held that electrodes were neither electrical goods nor electrical equipments. The effect of this decision was that electrodes became taxable as unclassified item at all points of sale. The assessing authority consequently issued notice under Section 21 for escaped assessment which was served on 16th December, 1976. On 11th March, 1977, the sale by the petitioner of locally purchased electordes were assessed to tax as unclassified item and the amount so assessed was deposited by the petitioner on 11th July, 1977. There is no dispute in this regard. What happened thereafter was that the assessing authority issued a notice on 23rd May, 1980, asking the petitioner to deposit interest on the aforesaid amount from 1st June, 1973, to 2nd August, 1977. It is this notice which is under challenge.
11. On the principle laid down by us above no demand of interest could be made from the petitioner for the quarters in which the calculation was made on circular issued by the Commissioner that electrodes are taxable under entry electrical equipments. The decision in B. C. M. Franklin's case 1972 UPTC 716 was given by this Court in October, 1972. It is not clear when the decision was published or became known to the petitioner. On the returns filed prior to it there could be no question of levying any interest. For the quarters of which return was filed after October, 1972, the liability can be fastened only if the petitioner had knowledge through the decision of this Court that electrode was unclassified item yet it determined the tax payable as nil on the circular of the Commissioner because then the calculation shall not be of tax payable under the Act.
12. By way of an amendment application the petitioner filed copy of the letter dated 25th January, 1969, issued by the Sales Tax Officer, Sector II, Kanpur, to M/s. Indian Oxygen Ltd. informing them that welding electrodes came under the category of electrical equipment and were taxable at 7 per cent and invoked the principle of promissory estoppel laid down in Motilal Padampat Sugar Mills Co. Ltd. v. State of U. P. 1979 UPTC 954 (SC). It was urged that the opposite parties having represented that electrodes were taxable as electrical equipments which representation was believed by the petitioner, to their prejudice inasmuch as on the one hand they had to pay 7 per cent tax to Indian Oxygen Company and on the other they were prevented from charging 4 per cent from the customers to whom it was sold. It is not necessary to consider this argument at this stage as we have already held that the petitioner is not liable to pay any interest on its turnover on the first two quarters. In case the assessing authority holds that the petitioner is liable to pay interest in respect of any other quarter on the law laid down by us above, it shall be open to the petitioner to raise this controversy.
13. As regards Writ Petition No. 163 of 1979, the petitioner carried on business of manufacturing and selling P. V. C. shoes at its factory. In the assessment year 1974-75 it was claimed that the sales effected by it were exempt from payment of tax as it was made to registered dealers. In support of this the petitioner filed form III-C(1). The assessing authority granted exemption in respect of such sales but assessed the petitioner to tax under Section 3-D(2) on the remaining. The petitioner was directed to pay interest on it as well. In this petition the challenge is confined to interest. The learned counsel urged that as the tax assessed was deposited within the time specified in Sub-section (1-B) of Section 8 the direction to pay interest was liable to be quashed. It was further urged that the petitioner made an application on 20th March, 1979, for grant of time for producing the remaining forms but the assessing authority without affording any opportunity to the petitioner to produce the forms not only imposed tax but levied interest on it. The learned "counsel mentioned that as sale was made to registered dealers and such sales being exempt under Section 3-D(1) the petitioner did not commit any error in determining the tax payable to be nil under Section 8(1). Therefore, its failure to file form could result in enhancement of "tax in excess" but the assessing authority could not while assessing tax create any demand for interest. Reliance was placed on Commissioner of Sales Tax v. Venus Auto Traders 1980 UPTC 273. None of the submissions have any merit in it. We have already indicated above that liability to pay interest under Sub-section (1) of Section 8 is not affected by the deposit of tax assessed within the time specified. The only question, therefore, is whether the calculation of tax payable was in accordance with the Act. It is not disputed that if the petitioner effected sales to a person other than a registered dealer then it was liable to pay tax under Sub-section (2) of Section 3-D. The liability to pay tax therefore depended on this crucial fact which is required to be proved by filing form III-C(1) under Sub-rules (6) and (7) of Rule 12-B. It is admitted that these forms were not filed. In the absence of these forms it cannot be said that the calculation of tax payable was in accordance with the Act.
14. Whether the petitioner could claim exemption only on form III-C(1) or other evidence does not require consideration in this case. Nor is it necessary to decide whether the assessing authority was justified in refusing to grant time for filing these forms as this can be effectively decided in appeal. The error in calculation of tax payable under the Act in cases of exemption or concession may normally arise where such forms, as are provided, are filed but they are rejected because of certain mistakes or omissions where calculation is done in the expectation that those forms shall be produced. In the former the calculation of tax payable is in accordance with the Act. But in the latter it depends on complying with law. If a dealer determines or calculates tax on assumptions made by it and fails to establish it then the determination or calculation is not only erroneous but not in accordance with the Act. As the petitioner's case is of second category the assessing authority was justified in demanding interest on it.
15. In Civil Miscellaneous Writ Petition No. 503 of 1979, the petitioner carrying on business of sale of iron and steel, cement and chemicals purchased iron and steel in the State against form III-A and sold it to Sri Joseph India, Calcutta, who exported it to Dubai. As the sale was in the course of export the petitioner claimed exemption from payment of tax which was allowed. But as the sale was neither in intra or inter State the assessing authority levied tax on purchases made by it at 4 per cent under Section 3-AAAA introduced retrospectively in 1978 with effect from 1st April, 1974. The assessment year in dispute is 1976-77. Its monthly return for March must have been filed by April, 1977. Till then there were no law imposing tax on purchases in the circumstances mentioned in the section. The determination of tax payable on the date of filing of return on the law laid down by us above was neither against law nor mala fide. The petitioner, therefore, could not be held liable for payment of interest on the tax which became payable due to retrospective legislation.
16. For the reasons stated above, Writ Petition No. 318 of 1979 succeeds and is allowed. The notice dated 31st July, 1979, is quashed. The Civil Miscellaneous Writ Petition No. 235 of 1980 also succeeds and is allowed in part. The petitioner shall not be liable to pay any interest on the first two quarters of 1972-73. In respect of the remaining two quarters it shall be decided by the assessing authority on the law laid down above whether the petitioner had knowledge of the decision given by this Court and whether the disclosure of the tax payable in the return was bona fide and in accordance with the Act. Writ Petition No. 163 of 1979 fails and is dismissed. Writ Petition No. 503 of 1979 succeeds and the direction of the assessing authority in respect of payment of interest only is quashed. The petitioners in Writ Petitions Nos. 318 and 503 of 1979 shall be entitled to their costs. In Writ Petition No. 235 of 1980 the parties in view of divided success shall bear their own costs. In Writ Petition No. 163 of 1979 the respondents shall be entitled to their costs.
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Title

Annapurna Biscuit Manufacturing ... vs The State Of Uttar Pradesh And Anr.

Court

High Court Of Judicature at Allahabad

JudgmentDate
22 October, 1980
Judges
  • H Seth
  • R Sahai