Madras High Court
Tvl. Karthik Roller Floor Mills Pvt. ... vs The State Of Tamil Nadu, Rep. By Its ... on 14 August, 2002
Author: R. Jayasimha Babu
Bench: R. Jayasimha Babu
ORDER R. Jayasimha Babu, J.
1. Counsel for the petitioner states that the issue involved in this case viz., the legality of the levy of interest on additional tax has already been dealt with by this Court, and this Court has held in W.P.Nos.1972 to 1976 of 1999 decided on 11.10.2001 that such levy of interest on additional tax is not legally tenable.
2. We have perused that judgment of the Court. That judgment has examined the relevant provisions of law and has also adverted to the decisions of the Apex Court relevant to the matter under consideration which decisions had been brought to the notice of the Court by one or the other party. One of the decisions referred to in the judgment is the decision of the Constitution Bench of the Supreme Court in the case of J.K. Synthetics Ltd. Vs. Commercial Tax Officer (94 S.T.C.422).
3. Counsel for the petitioner also brought to our notice another decision of this Court in W.P.No.11631 of 1999 decided on 14.9.2001, wherein, it was held that the levy of interest on additional tax was untenable in the light of the decision of the Supreme Court in the case of India Carbon Ltd. Vs. State of Assam (106 S.T.C.460). The decision of the Apex Court in that case of India Carbon (106 S.T.C.460) refers the decision of the Constitution Bench in the case of J.K. Synthetics (94 S.T.C.422) (supra).
4. Learned Counsel for the Revenue, however, contends that the decision of this Court to which we have referred runs counter to another earlier decision of this Court in the case of Deputy Commissioner (C.T.) Vs. M. Murugesan & Bros. (58 S.T.C.143). In that case, the Court relied on the decision of the Supreme Court in the case of Ashok Service Centre Vs. State of Orissa (53 S.T.C 1) and held that the earlier decision of this Court in the case of State of Tamil Nadu Vs. Mathurai Veerasamy & Co., (1983)(52 S.T.C.131) which had held that the provision relevant to penalty and interest would not apply to the surcharge levied under the Tamil Nadu Sales Tax (Surcharge) Act,1971 cannot be taken as laying down the law correctly.
5. That decision in the case of Deputy Commissioner (C.T.) Vs. M. Murugesan & Bros. (58 S.T.C.143)(Supra) was not placed before the Bench which rendered the judgment on which the petitioner relies.
6. The Supreme Court in the case of J.K. Synthetics (94 S.T.C.422) (supra), a decision rendered by the Constitution Bench, inter alia, held that, "... any provision made in a statute for charging or levying interest on delayed payment of tax must be construed as a substantive law and not adjectival law."
That decision was relied upon by another Bench of the Apex Court in the case of India Carbon (106 S.T.C.460)(supra), wherein, it was held that there is no substantive provision in the Central Sales Tax Act requiring payment of interest on Central Sales Tax and there is, therefore, no substantive provision in the Central Sales Tax Act which obliges the assessee to pay interest on delayed payment of Central sales tax. The Court held that Section 9 (2-A) of the Central Sales Tax Act which makes applicable to the assessment, reassessment, collection and enforcement of Central sales tax the provisions relating to offences and penalties contained in the State Acts as if the Central sales tax was a State sales tax, and which Section did not make any specific reference to interest would not enable the Revenue to claim interest for the delay in the payment of Central Sales Tax Act, by relying on the provision providing for interest in the State Sales Tax Act. The Court in the case of India Carbon (106 S.T.C.460)(supra) held thus:
"Having regard to what has been said in the case of Kemka & Co. , it must be held that the substantive law that the States' sales tax authorities must apply is the Central Act. In such application, for procedural purposes alone, the provisions of the State Act are available. The provision relating to interest in the latter part of Section 9(2) can be employed by the States' sales tax authorities only if the Central Act makes a substantive provision for the levy and charge of interest on Central Sales tax and only to that extent. There being no substantive provision in the Central Act requiring the payment of interest on Central sales tax the States' sales tax authorities cannot, for the purpose of collecting and enforcing payment of Central sales tax, charge interest thereon."
7. The Tamil Nadu Additional Sales Tax Act by Section 2(1)(b), makes the provisions of the Tamil Nadu General Sales Tax Act applicable in relation to the additional tax payable, as they apply in relation to the tax payable under the said Act. Additional sales tax being a levy provided for in the special enactment relating to the levy of additional sales tax, the substantive provisions in relation to that levy have to be found in that enactment, and there being no substantive provision in the Tamil Nadu Additional Sales Tax Act for the levy of interest on additional tax, the provisions of the Tamil Nadu General Sales Tax Act providing for levy of interest on the sales tax payable under that enactment, cannot be construed as a source of power to the State to levy interest on the additional sales tax.
8. Having regard to the development of the law subsequent to the decision rendered in the case of Deputy Commissioner (C.T.) Vs. M. Murugesan & Bros. (58 S.T.C.143)(Supra, the law laid down in the decision rendered in W.P.No.11632 of 1999, as also in W.P.No.11631 of 1999, in our view is consistent with the law declared by the Supreme Court by the Constitution Bench in the case of J.K. Synthetics (94 S.T.C.422) (supra), and in the case of India Carbon (106 S.T.C.460)(supra) and does not require any reconsideration.
9. Applying the law laid down by this Court R. Jayasimha Babu, J.
and K.P. Sivasubramaniam, J.
in those decisions, the petitioner is entitled to succeed. The impugned order which seeks to levy interest on the Additional Sales Tax Act is set aside. The writ petitions are allowed. Consequently, W.P.M.P.No.9694 of 2001 is closed.