Andhra HC (Pre-Telangana)
Lamina Suspension Products (P.) ... vs State Of Andhra Pradesh And Anr. on 16 October, 1989
Equivalent citations: [1991]187ITR105(AP), [1990]78STC429(AP), [1991]56TAXMAN7(AP)
Author: K. Jayachandra Reddy
Bench: K. Jayachandra Reddy
JUDGMENT Jayachandra Reddy, J.
1. The scope of section 16(3) of the Andhra Pradesh General Sales Tax Act, 1957, hereinafter referred to as "the Act", falls for consideration in these writ petitions. The question is "whether the assessee is liable to pay interest at the rate of 2 per cent. only for every completed month or whether he has to pay at the same rate for the whole month even for part of the month's delay in paying tax ?" Section 16(3) reads thus :
"16, payment of tax and other dues payable under the Act. - ...
(3) If the tax assessed or penalty levied or any other amount due under this Act or any installment thereof is not paid by any dealer or other person within the time specified therefor in the notice of demand or in the order permitting payment in installments or in any other provision of this Act or rule made thereunder, the dealer or other person shall pay, in addition to the amount of such tax, penalty, installment or other amount, interest at the rate of two rupees for every one hundred rupees or part thereof for each month or part thereof,from the date specified for its payment."
2. Learned counsel for the petitioner submits that the words "at the rate of two rupee for every one hundred rupees or part thereof for each month or part thereof" only denote the rate of interest and make the assessee liable to pay the interest at that rate not only for the completed month, but also for part of it if there is delay in payment of tax of more than a month.
3. In these cases, the impugned notices were issued by the Commercial Tax Officer, Vijayawada, calling upon the petitioner to pay interest at the rate of Rs. 2 for every one hundred rupees or part thereof, for each month or part thereof from the due date. The notices show that the assessee is called upon to pay interest for the whole month. The learned Government Pleader submits that section 16(3) lays down that the rate of interest for every month is two per cent, and even part of a month is reckoned as a month.
4. Learned counsel for the petitioner, on the other hand, submits that even if the interpretation sought to be given by the learned Government Pleader is to be accepted, then the provision itself is ultra vires inasmuch as the assessee is being made liable to pay interest even for the period for which he is not due to pay and it is violative of articles 14 and 19 of the Constitution of India.
5. We have carefully examined the provision of law and we are of the view that we cannot agree with the learned Government Pleader. The words "for every one hundred rupees or part thereof for each month or part thereof" only denote the rate of interest and further clarify that the words "for each month or part thereof" have to be taken into account in levying interest at that rate. It means that the assessee has to pay interest not only for the completed months, but also for part of the month at that rate. A similar type of question came up for consideration before a Bench of the Allahabad High Court in Brooke Bond India Ltd. v. CST [1983] 51 STC 357. Section 7(1-B) of the U.P. Sales Tax Act is analogous to section 16(3) of the Andhra Pradesh General Sales Tax Act and the relevant part of the said provision reads thus (at page 358) :
"... there shall be payable interest at the rate of two per cent. for every month or part thereof on such deposit from the date immediately following the last date prescribed..."
6. The Division Bench agreeing with the earlier view taken by the said court in CST v.Rishipal Krishna Gopal [1981] UPTC 468, held that in case the delay is of part of a month only, interest at 2 per cent. can be charged for that period of delay and not for the full month. To the same effect is another judgment of a Division Bench of the Madras High Court in Sakthi Sugars Ltd. v. Assistant Commissioner of Commercial Taxes [1985] 59 STC 52, the relevant portion of section 24(3) of the Tamil Nadu general Sales Tax Act, which is analogous to section 16(3) of the Andhra Pradesh General Sales Tax Act, reads thus (at p. 58) :
"... One rupee for every hundred rupees or part thereof of such amount for each month or part thereof...".
7. The Division Bench held that section 24(3), which creates a fiscal liability. Must be strictly construed and the words "part thereof" used in section 24(3) would clearly show that the Legislature intended that interest would be payable for the actual period of delay and thus if the delay is one month and ten days, the interest payable will not be for two months, but it will be only for one month and ten days. This decision applies on all fours to the question raised before us. We respectfully agree with the view taken by the Allahabad and Madras High Courts and hold that the assessee is liable to pay interest for the actual period of delay and will not be liable to pay for the whole month as demanded by the impugned notices. Accordingly, in W.P. No. 13665 of 1987, the assessee would be liable to pay interest only for three days in respect of the delay in April, 1986, one day in November, 1986, and two days in December, 1986. In W.P. No. 11524 of 1987, the assessee is liable to pay interest for the delay of one day in April, 1987, and two days in May, 1987. The impugned notices are quashed only to the extent indicated above. The writ petitions are partly allowed. No costs. Advocate's fee Rs. 200 in each.