Madras High Court
Godrej & Boyce Mfg. Co. Ltd. vs Joint Commissioner Of Commercial ... on 9 November, 1993
JUDGMENT Janarthanam, J.
1. Godrej & Boyce Manufacturing Co. Ltd., Madras-34 (petitioner) is a public limited company registered under the Indian Companies Act, having its head Office at Bombay and branches all over India. One of its branches is located at 1, SIDCO Industrial Estate, Ambattur, Madras-98. It is a registered dealer under the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959) (of short "the Act") and under the Central Sales Tax Act, 1956. It is rule 18 assessee, paying tax on the monthly returns on the actual turnover reported.
2. While submitting the monthly return for the month of December 1991, relatable to the assessment year 1991-92, its accountant was stated to have inadvertently reported the turnover of October, 1991, instead of reporting the turnover of December, 1991 and on the turnover so reported, it had paid the tax due by way of cheque, along with such a return.
3. Subsequently, while filing the return for the month of January, 1992, it realised the mistake committed and accordingly filed a revised return for the actual turnover of December, 1991 on February 19, 1992 and paid the difference in tax, amounting to Rs. 20,15,601. Thereafter, it received a notice in form 29 dated March 17, 1992 from the Assistant Commissioner (CT), Central Assessment Circle I, Greams Road, Madras-6 (third respondent) levying interest of Rs. 40,312 by way of penalty under section 24(3) of the Act, calculated at the rate of two per cent per month on the tax due, that is to say, on Rs. 20,15,601.
4. Aggrieved by the demand so raised, a revision had been filed under section 33 before the Deputy Commissioner (CT) (North), Ajith Buildings, III floor, Madras-6 (second respondent), who, in turn, dismissed the same in his proceedings R.P. No. 203 of 1992 dated August 28, 1992.
5. A further revision was filed under section 35 before the Joint Commissioner of Commercial Taxes-IV, Office of the Special Commissioner and Commissioner of Commercial Taxes, Chepauk, Madras-5 (first respondent), who, in turn, dismissed the same in his proceedings in D. Dis. No. JJ1/116743/92 dated April 6, 1993.
6. Aggrieved by the said orders, the petitioner resorted to the present action praying for issue of a writ of certiorari to quash the same contending that rule 18(3) of the Tamil Nadu General Sales Tax Rules, 1959 (for short "the Rules") read with sections 13(2) and 24(3) of the Act is very clear that if the return is submitted, without payment of tax, then such amount shall become due, on the date of the receipt of the return or on last due date, as prescribed under the Act, whichever is later; that since there was no non-payment of tax, along with the return, either on the date of filing of the original return or on the date of filing the revised return, there is no tax amount remaining unpaid on the date of filing of such returns and that in such circumstances, the department is denuded of any power of charging interest under section 24(3) and thereby the orders impugned are ex facie illegal.
7. At the time, when the matter came up for admission, learned Government Advocate (Taxes) took notice and arguments of either learned counsel were heard.
8. Mr. C. Natarajan, learned counsel appearing for the petitioner would, in elaboration of the projection of the contentions, taken in the affidavit, filed in support of the writ petition, by placing implicit reliance upon the decision of a Division Bench of this Court in Sakthi Sugars Ltd. v. Assistant Commissioner of Commercial Taxes, Central Assessment Circle I [1985] 59 STC 52, contend that a case of provisional assessment under rule 18(3) of the Rules would not at all be covered by the provisions of section 24(3) of the Act and that even otherwise, in the facts and circumstances of the case, rule 18(4) would get attracted, in the sense of giving power to the assessing authority, to determine the turnover to the best of its judgment and provisionally determine the tax or taxes payable for the month, after making such enquiry, as it considers necessary and after giving due notice therefor, serve a notice in form B2 demanding the tax to be paid at the time and in the manner specified in such notice, besides imposition of penalty under section 12(5) of the Act, if the circumstances justify such an action, instead of levy of interest under section 24(3) by way of penalty.
9. Mr. T. Ayyasamy, learned Government Advocate (Taxes) would, however, repel such a submission and further state that the decision of the Division Bench, as referred to by learned counsel for the petitioner, could not at all be stated to be holding the field, as of now, inasmuch as section 24 had taken a metamorphic change, by subsequent amendments thereto and this aspect of the matter came to be considered in a later decision (unreported) of another Division Bench of this Court in Writ Appeal No. 992 of 1989 (Apollo Tubes Limited v. Additional Deputy Commercial Tax Officer, Ranipet) dated July 9, 1992 [Since reported in page 339 supra], which expressed the view, that by virtue of the amendments, as subsequently issued, the view, as expressed in the earlier decision of the Division Bench, cannot be stated to be still holding the field; that in such a situation, the orders impugned are quite in accordance with the present law and that the foundational or jurisdictional facts, in the case on hand, do not at all warrant the adoption of a procedure, as contemplated under rule 18(4) of the Rules.
10. In the process of consideration of rival submissions of either learned counsel, it becomes absolutely necessary to set out the relevant provisions of the Act, as they originally stood and their present position, after amendments.
11. Section 24(3), as it originally stood, reads as follows :
"If the tax assessed under this Act or any instalment thereof is not paid by any dealer or person within the time specified therefor in the notice of assessment or in the order permitting payment in instalments, the dealer or person shall pay by way of penalty, in addition to the amount due, a sum equal to a sum calculated at the rate of one rupee for every hundred rupees or part thereof of such amount for each month or part thereof, after the date specified for its payment."
12. Section 12(3) was later amended and it reads thus :
"It the tax assessed or has become payable under this Act or any instalment thereof is not paid by any dealer or person within the time specified therefor in the notice of assessment or in the order permitting payment in instalments, the dealer or person shall pay by way of interest, in addition to the amount due, a sum equal to a sum calculated at the rate of two per cent of such amount for each month or part thereof after the date specified for its payment."
13. It was further amended by Act 78 of 1986 with effect from January 1, 1987 to the following effect :
"On any amount remaining unpaid after the date specified for its payment as referred to in sub-section (1) or in the order permitting payment in instalments, the dealer or person shall pay, in addition to the amount due, interest at two per cent per month of such amount for the entire period of default :
Provided that if the amount remaining unpaid is less than one hundred rupees and the period of default is not more than a month, no interest shall be paid :
Provided further that where a dealer or person has preferred an appeal or revisions against any order of assessment under this Act, the interest payable under this sub-section, in respect of the amount in dispute in the appeal or revision, shall be postponed till the disposal of the appeal or revision, as the case may be, and shall be calculated on the amount that becomes due in accordance with the final order passed on the appeal or revision as if such amount had been the subject-matter of the appeal or revision."
14. Sub-section (1) of section 24 reads as under :
"Save as otherwise provided for in sub-section (2) of section 13, the tax assessed or has become payable under this Act from a dealer or person and any other amount due from him under this Act shall be paid in such manner and in such instalments, if any and within such time as may be specified in the notice of assessment, not being less than twenty-one days from the date of service of the notice. The tax under sub-section (2) of section 13 shall be paid without any notice of demand. In default of such payment the whole of the amount outstanding on the date of default shall become immediately due and shall be a charge on the properties of the person or persons liable to pay the tax or interest under this Act."
15. Section 13(2) is to the following effect :
"In lieu of the tax provisionally determined under sub-section (1), a dealer may, at his option, pay tax in advance during the year on the basis of his actual turnover for each month or for such other periods as may be prescribed. For this purpose, he may be required to furnish returns showing his actual turnover for each month or other periods as may be prescribed and to pay tax on the basis of such returns. The tax under this sub-section shall become due without any notice of demand to the dealer on the date of receipt of the return or on the last due date as prescribed, whichever is later."
16. For the enforcement of section 13(2), rules have been framed and the rule relevant for the present purpose is rule 18(1) to (4) of the Rules, and it runs as under :
"(1) In lieu of opting for payment of advance tax described in the foregoing rules, the dealer may apply to the assessing authority for permission to submit returns and pay tax in accordance with the provisions of sub-rules (2) to (7) of this rule. If the dealer desires that this method of assessment should be applied to him from the beginning of any year he shall intimate his desire in writing to the assessing authority at the time of submitting the return prescribed in rule 9 or sub-rule (2) of rule 15 and, on being permitted, shall submit the returns and pay the tax in accordance with the provisions of sub-rules (7) to (9) of this rule.
(1-A) ...............
(1-B) ...............
(2) Subject to the provisions of sub-rule (5), the dealer shall submit a return in form A-1 showing the total and taxable turnover for each month and the amount or amounts actually collected by him by way of tax or taxes during that month. The return for each month shall be submitted so as to reach the assessing authority on or before the 20th of the succeeding month except for the month of February, for which the returns shall be submitted so as to reach the assessing authority on or before the 20th of March. Along with the return, he shall also submit proof of payment as specified in sub-rule (1) of rule 55 for the full amount of the tax or taxes payable under any of the section 3, 3-A, 3-B, 4, 5 or 7A-A for the month to which the return relates after deducting therefrom the amount, if any, claimed as refund, in the month under rule 23.
(3) The return in form A-1 so filed shall, subject to the provisions of sub-rule (4), be provisionally accepted. If the return is submitted without proof of payment as specified in sub-rule (1) of rule 55 for the full amount of tax payable after deducting therefrom the amount, if any, claimed as reimbursement or refund due in the month under rule 23, such amount of tax shall become due on the date of receipt of the return or on the last due date as prescribed in sub-rule (2), whichever is later, and shall be recovered in accordance with the provisions of the Act without any notice of demand to the dealer.
(4) If no return is submitted in respect of any month on or before the date specified in sub-rule (2) or before the expiry of the period prescribed in sub-rule (5) or if the return submitted appears to be incorrect or incomplete, the assessing authority shall, after making such enquiry as he considers necessary and after giving the dealer notice as prescribed in rule 12, determine the turnover to the best of his judgment and provisionally assess the tax or taxes payable for the month and shall serve upon the dealer a notice in form B-2 and the dealer shall pay the sum demanded at the time and in the manner specified in the notice."
17. The latest decision of the Division Bench, as referred to supra [Apollo Tubes Ltd. v. Additional Deputy Commercial Tax Officer [1994] 93 STC 339 (Mad.)], happened to consider the effect and force of the various provisions, as extracted above, while dealing with the question whether the proceeding covered by rule 18(3) would fall under section 24(3), in paragraph 6 of its judgment and ultimately expressed thus :
"6. One of the other contentions dealt with by the Division Bench was whether proceeding covered by rule 18(3) would fall under section 24(3). Having regard to the language of section 24(3), as it stood then, the Division Bench answered it in the negative and held that proceeding falling under rule 18(3) would not be governed by section 24(3). It is the contention of the learned counsel for the appellant that the position is not in any way changed by the amendment brought into force with effect from January 1, 1987. According to him, even after the amendment of section 24(3), proceedings which are governed by rule 18(3) will not fall under section 24(3) and in all such cases, there should be an order of assessment before any penalty is levied. We do not agree with this contention. The language of section 24(3) has been considerably altered by the amendment in 1986. Previously, the sub-section was referring to an assessment and an order of assessment. At present, the sub-section does not refer to any assessment or any proceeding on behalf of the officer for the purpose of passing an order of assessment. On the other hand, the sub-section merely says that on any amount remaining unpaid, after the specified date, the dealer shall pay, in addition to the amount the due, interest at 2 per cent per month on such amount for the entire period of default. Even the liability to pay interest is not only automatic, but the section enjoins a liability on the part of the dealer to pay the interest in addition to the amount due by way of tax under section 24(3)."
18. On the fact of the views expressed, as above, it cannot be said that there is no force in the argument argument advanced by learned Government Advocate (Taxes) on this aspect.
19. Dealing with the contention to the other prong of the submission, it is but necessary to advert to certain factual situation, about which there is no controversy at all. The petitioner was a rule 18 assessee by submitted monthly returns and paying the tax on the actual turnover every month. No doubt, he submitted at first the monthly return for the month of December, 1991 on January 20, 1992 and paid the tax therefor. The petitioner would make an unequivocal admission that due to the inadvertence of its accountant, the turnover for the month of October, 1991 had been reported as the turnover for the month of December, 1991 and the mistake so committed came to be realised only at the time of filing of the return for the month of January, 1992, that is to say, on February 19, 1992 and the revised return had been filed on the very same day itself for the month of December, 1991, by paying the difference in tax. In such process, there was a deficiency of turnover to the tune of Rs. 20,15,601 for the month of December, 1991. The tax due therefor, which would have been payable on January 20, 1992, had actually been paid on February 19, 1992, after a delay of thirty days.
20. On the face of such candid admission as to the actual turnover for the month of December, 1991, with respect to which, the return is required to be filed on or before January 20, 1992, it goes without saying that the tax liability for the turnover reported, had accrued and become payable on and from January 20, 1992 and consequently, for the delay of thirty days involved in remitting the payment of tax on the deficiency of turnover, it goes without saying that the petitioner-assessee has to be mulcted with the liability for payment of interest at two per cent per month according to the salient provisions adumbrated under section 24(3) of the Act.
21. It is not as if this sort of a mistake had been detected by the respondent-assessing authority, in the course of a random check of monthly turnover or check of the accounts at the fag end of the assessment year warranting either for provisional or final assessment by the determination of the turnover to the best of his judgment, in which case alone, sub-rule (4) of rule 18 would get attracted. But the plain fact is, as adverted to earlier, the petitioner-assessee was honest enough to voluntarily disclose the turnover, though at a later point of time, which he would have to disclose for the month of December, 1991 on or before January 20, 1992 and paid the tax therefor, of course, after thirty days. Such an exemplary gesture on its part must have to inevitably result in the payment of interest also for the belated remittance of tax, in strict compliance with the provisions of section 24(3) or otherwise, by pretence or facade of such a gesture, the legitimate liability accrued for payment of interest can be avoided, by the creation of a contumacious circumstance or situation, as the one in the case on hand, by all rule 18 assessees, thereby creating a colossal loss to the revenue, by way of unlawful enrichment to themselves, in the sense of utilisation of the money legitimately going to the coffers of the treasury.
22. For the reasons as above, the writ petition deserves to be dismissed even at the admission stage and the same is accordingly dismissed. There shall, however, be no order as to costs, in the circumstances of the case.
23. Writ petition dismissed.