Ashok Leyland Limited vs The Assistant Commissioner (C T) on 27 March, 2002

[Cites 41, Cited by 1]

Madras High Court

Ashok Leyland Limited vs The Assistant Commissioner (C T) on 27 March, 2002

The above two writ petitions are filed seeking for the relief of issuance of a writ of certiorari under Article 226 of the Constitution of India quashing the Order of the 2nd respondent - Tamil Nadu Taxation Special Tribunal dated 23.12.1998 made in O.P.Nos.1552 and 1321 of 1997 confirming the proceedings of the 1st respondent - the Assistant Commissioner (C T), Central Assessment Circle- III, Chennai dated 10 .4.1997 in TNGST/15209/93-94 and the proceedings dated 21.3.1997 in TNGST/15209/91-92 whereby a sum of Rs.10,95,000/- and Rs.9,11,040/- have been imposed on the petitioner as interest under Section 24(3) of the T.N.G.S.T.Act for the belated payment of tax for the said two assessment years and quash the same.

2. In order to comprehend the point to be resolved in this case, the following facts are to be stated:

The petitioner, an incorporated company under the Companies Act is an assessee on the file of the first respondent. The petitioner received inter alia lease rentals from M/s.Ennore Foundaries Limited on the lease of Diesel Gensets in a sum of Rs.1.50 crores for both the assessment years 1991-92 and 1993-94. Section 3-A of the TNGST Act,( hereinafter referred to as the "Act") provides for levy of tax on the right to use any goods. The petitioner challenged the said provision by filing writ petition in W.P.No.6240 of 1992 and this Court by its order dated 29.4.1992 granted interim stay of operation of the impugned provision Section 3-A of the TNGST Act, 1959, insofar as they purport to levy sales tax on the lease transactions of the petitioner. It is pertinent to state that the above said provision Section 3-A introduced by Act 28 of 1984 was subsequently amended by Act 25 of 1993 with retrospective effect of the date of original inception. In view of the amendment made, the writ petition filed by the petitioner was disposed of as infructuous on 22.12.1994. Thereafter, the petitioner on 20.9.1995 deposited the tax at 4 percent for the assessment years 1 993-94 and 1991-92. However, the first respondent demanded interest for the belated payment of tax invoking the provisions of Section 24(3) of the TNGST Act. The petitioner challenged the demand of interest on the ground that the operation of the provision of Section 3-A has been stayed by this Court from 29.4.1992 to 22.12.1994. Hence, the demand is illegal. However, the Tribunal dismissed the Original Petition filed by the assessee. Hence, the writ petitions with the prayer aforesaid.

3. Mr.Prasad, learned counsel appearing for the petitioner assailed the order primarily on the grounds that the writ petition filed by the petitioner in W.P.No.6240 of 1992 was admitted by this court on 29.4.1992 and interim stay was also granted. In that writ petition, the petitioner challenged the provision - Section 3-A of the TNGST Act, as introduced by Act 28 of 1984, on the ground that the scope of the provision covers within its ambit the restriction as to the imposition of tax on sale and purchase as envisaged under Article 286 of the Constitution of India. The said Article lays down that no law of the State shall, imposes or authorises the imposition of a tax on the sale or purchase of goods, where such sale or purchase has taken place (a) outside the State, or (b) in the course of import of goods into or export of goods out of the territory of India. When the said writ petition was pending before this court, by means of an amendment, by Act 25 of 1993, the State Government cured the defects as pointed out in the said writ petition. Hence, though the writ petition was disposed of as infructuous, in substance the contention of the petitioner deemed to have been accepted. Hence, the levy of penalty cannot be legally sustained. He further contended that since the tax due has been paid before final assessment has been made in respect of the respective assessment years, no interest could be levied. For the said propositions, he relied on the following decisions to bring home his contention:

"(1) KANORIA CHEMICALS AND INDUSTRIES LTD. AND OTHERS U.P.STATE ELECTRICITY BOARD AND OTHERS reported in 1997(5) S.C.C. 772 (2)CONSOLIDATED COFFEE LTD. VS. AGRICULTURA INCOME TAX OFFICER, MADIKERI AND OTHERS reported in (2001) 1 S.C.C. 278 (3) FOOD CORPORATION OF INDIA VS. STATE OF HARYANA AND ANOTHER reported in 2000 (3) S.C.C. 495 (4) COMMISSIONER OF INCOME TAX, BHOPAL VS. HINDUSTAN ELECTOR GRAPHITES LTD. INDORE reported in 2000 (3) S.S.C. 595 and (5) J.K.SYNTHETICS LTD. VS. COMMERCIAL TAX OFFICER reported in 94 S.T.C. 422.

4. On the other hand, the learned Government Pleader contended that there is absolutely no merit in the case of the petitioner. The Statute provides that if on any amount remaining unpaid after the date specified for its payment, the dealer shall pay in addition to the amount due interest at 2 percent per month of such amount for the entire period of default. The petitioner though filed the return for the relevant assessment years disclosing the taxable turnover of Rs.1.50 crores, has not paid the tax on the relevant dates. Though this Court has granted stay at the instance of the petitioner, ultimately the writ petition was disposed of as infructuous. Hence, as per the statutory provision of Section 24(3) of the TNGST Act, the petitioner has to pay interest for the belated payment. He prayed for the dismissal of the above writ petitions.

5. Before adverting to the arguments on either side, it is relevant to note under what circumstances the writ petition challenging the unamended Section 3-A of the Act was filed and under what grounds as well.

6. Section 3-A of the TNGST Act as inserted by Act 28 of 1984 is as follows:

"3-A Levy of tax on the right to use any goods:

Not withstanding anything contained in sections 3, 4, 5,

7 and 7A, but subject to the other provisions of the Act, every dealer referred to in item (viii) of clause (g) of the Section 2, whose total turnover relating to the business of transfer of the right to use any goods for any purpose as specified therein is not less than fifty thousand rupees and every casual trader or agent of a non-resident dealer in respect of such business, whatever be his turnover for the year, shall pay tax at such rate not exceeding five percent of such turnover as may be notified by the Government from time to time. The Government may notify different rates for different goods or for different clauses of dealers for the purpose of this section."

7. This provision has been challenged by the petitioner. As seen from the affidavit filed in support of the above writ petition in W.P. No.6240 of 1992, there is absolutely no cause of action for the petitioner to maintain the writ petition. It is stated in the affidavit that the petitioner manufactures and sells Ashok Leyland Chassis ( motor vehicles), spare parts and accessories and it is a dealer registered under the TNGST Act and also Cental Sales Tax Act, 1956, that on the request of M/s. Ennore Foundaries Limited, which supplies quality steel castings to the petitioner for use in the manufacture of motor vehicles, the petitioner purchased from the suppliers, a new electrical generator set and let it out on lease to Ennore Foundaries Limited from 21.3.1990 for a period of seven years on the lease rentals and received the lease rental. In respect of such lease rentals, the petitioner has not collected any sales tax from its lessee. This is the precise transaction stated in the affidavit. Nothing more as to whether the transaction of the petitioner relates to inter-State transaction or transaction in the course of import into the territory of India or export out of the territory of India were stated in the affidavit filed in support of the writ petition. Obviously, no such transaction was involved in the petitioner's business. In paragraph No.14 of the affidavit, it was stated that in the case of a 'deemed sale', there is no actual sale at all; there being no actual sale in a lease transaction, even the Constitution (46th Amendment) Act cannot enlarge the definition of 'sale' so as to make it include transactions in which there is no transfer of property at all from one of the contracting parties to the other. Article 366, Clause (29-A), sub-clause ( d) is therefore invalid in law, being beyond the competence of Parliament itself and consequently the new charging Section 3-A of the TNGST Act is also invalid. Further, it was contended that clause 29-A of Article 366 is also bad in law in view of the specific new provision contained in Article 286 of the Constitution. With the above grounds, the petitioner ultimately sought for a de claration of Section 4 of the Constitution (46th Amendment) Act, 1982 insofar as it has inserted a new Sub-Clause (d) in the new Clause 29-A in Article 366 of the Constitution of India and likewise, the new charging Section 3-A and Section 2(g), 2(n) and 2(r) of the TNGST Act, 1959, as amended by the Tamil Nadu Act 28 of 1984 are ultra vires of the Constitution of India so offending Articles 14, 19(1)(g) and 300-A.

8. It is pertinent to state here the Constitution Bench of the Honourable Supreme Court in the decision of BUILDERS ASSOCIATION OF INDIA AND OTHERS VS. UNION OF INDIA AND OTHERS DATED 31.3.1989 reported in 73 S.T.C. 370 (though it was agitated before the Supreme Court with reference to (works contract) sub-clause ( b) of Clause (29-A) of Article

366), upheld the validity of 46th amendment in its entirety by holding that "tax on the sale or purchase of goods" includes deemed transfer of property in goods involved in the works contract etc., are valid in law, since not less than one-half of the state legislatures had ratified the 46th amendment bill, 1981 in accordance with the provisions of the proviso to Article 368(2) of the Constitution of India and the enlarged definition of deemed sale also to comply with the constitutional restrictions imposed in relation to tax on sale in the course of export or import, sale in the course of inter-State trade or sales of essential commodities. In spite of that, the petitioner in the writ petition challenged the 46th amendment as seen from the prayer, which runs as follows:

"To issue a writ of declaration or any other appropriate writ or order direction and declare that Section 4 of the Constitution (46th Amendment) Act, 1982 insofar as it has inserted a new Sub-Clause (d) in the new Clause 29-A in Article 366 of the Constitution of India and likewise, the new charging Section 3-A and Section 2(g), 2(n) and 2( r) of the TNGST Act, 1959, as amended by the Tamil Nadu Act 28 of 1984 are ultra vires of the Constitution of India so offending Articles 14 , 19(1)(g) and 300-A."

9. Apart from that, as stated above, the petitioner has not made out any cause of action for challenging the validity of Section 3-A of the TNGST Act, particularly, he has not made out any case that his transactions comes within the restriction as contemplated under Article 286 of the Constitution of India. It is manifestly clear from the returns that the petitioner's transaction even prior to the amendment of Section 3-A and subsequent to the amendment, as introduced by Act 25 of 1993 are one and the same and not even a single rupee is reduced in the turnover of the petitioner by virtue of the amendment. Hence, the contention of the learned counsel that though the writ petition was disposed of as infructuous, the petitioner's contention was deemed to have been accepted for amending the provision cannot be accepted and cannot in any way advance the case of the petitioner. On the contrary, the transaction of the petitioner, which was sought to be assessed under Section 3-A is simplicitor a transaction of lease rental of the goods purchased locally and leased out to Ennore Foundaries Limited as per the sworn affidavit and taxable under Section 3-A both in the unamended and amended form. When a specific question was put to the learned counsel as to what are all the transactions sought to be assessed under Section 3-A and what was the cause of action, which prompted the petitioner to file the earlier writ petition, the learned counsel is not able to answer and admitted that the transactions of the petitioner are nothing to do with the restriction imposed under Article 286 of the Constitution of India. The statement of objects and reasons for the amendment Act 25 of 1993 also did not suggest anything as to the amendments were made because of the reason of challenge of the provision in court of law, but rather proceeds as follows:

"In the budget speech for 1993-94, it has been announced, as a major tax reform effect to rationalise certain provisions of the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act I of 1959) relating to total turnover, works contract, leasing, self-assessment, compounding provision to civil works contract, etc. The Government have accordingly proposed to amend the said Tamil Nadu General Sales Tax Act, 195 9 for the above purposes.

2. The Bill seeks to give effect to the above proposal."

10. The yet another significant fact is that the petitioner had filed the returns in respect of the two assessment years under dispute in time by admitting and disclosing the taxable turnover under Section 3-A of the Act as Rs.1.50 crores, but did not pay the tax on the ground that the petitioner did not collect tax in respect of the transactions as is evident from the returns produced before us. Further, these returns were filed well before filing of the writ petition on 29.4.1992. The foregoing discussion manifestly indicates that the petitioner obviously had not made out any factual foundation to bring his case within the restriction contemplated under Article 286 and filed the writ petition and obtained interim order only with a mala fide intention to evade the payment of legitimate tax due to the Government or at least postpone the payment as far as possible.

11. Though interim order was granted by this court in W.P.No.6240 of 1992 on 29.4.1992, the writ petition was disposed of as infructuous on 22.12.1994. Hence, the interim order granted merged with the final order. The interim order granted by this court only rendered the provision inoperative from the date of passing of the stay order, however did not wipe out the provision. The provision, Section 3-A was very well in the statute book during the pendency of the writ petition. On the disposal of the writ petition as infructuous, the petitioner was relegated to the original position prior to the filing of the writ petition and as such, the petitioner was not relieved of its obligation to pay tax and further the obligation of paying interest for belated payment of tax for the period the stay order had remained operative. Even assuming for a moment, the filing of the writ petition is a bona fide one (which we have viewed as mala fide), the statutory obligation to pay interest is not wiped out since it is only compensatory and not penal in nature in the event of dismissal of the substantive proceedings in the main writ petition.

12. Further, though the writ petition has been disposed of as early as 22.12.1994, the petitioner paid the tax due to the Government only on 20.9.1995. The petitioner retained the amount legitimately due to the Government in the guise of filing a writ petition without there being any cause of action or bona fide and obtained an order of stay thereby retained the amount with it during the entire period and earned good profit with the amount and further deprived the State from utilising the said amount for its public purpose. The disposal of the writ petition ultimately rendered the petitioner to pay interest for the belated payment under Section 24(3) of the Act.

13. It is well established principle that no act of court causes prejudice to any party. The prestine doctrine couched in the maxim "

actus curiae neminem gravabit" has ever remained a salutary and guiding principle. Hence, we are of the clear view that there is absolutely no bona fide on the part of the petitioner to file the writ petition in W.P.No.6240 of 1992, but the same was filed on the mala fide intention of postponing the payment of tax under Section 3-A of the Act and the dismissal of the writ petition and the consequent payment of tax belatedly on 20.9.1995 rendered the petitioner liable to pay interest under Section 24(3) of the Act. Hence, the first contention of the learned counsel for the petitioner that the interest could not be levied during the period in which the stay order was in force cannot be accepted and the same is rejected as devoid of any merits.

14. For the above said conclusion of ours, we could derive support from the decision of the Supreme Court in the case of CALCUTTA JUTE MANUFACTURING COMPANY VS. COMMERCIAL TAX OFFICER reported in 106 S.T.C. 433, wherein it was held as follows:

"The tax amount which they should have paid as per Section 6B remained with appellant during the entire period and they would have earned good profit with that amount. The State, to which the tax amount should necessarily have gone, was not able to utilise it for public purpose. When the appellant had the advantage of keeping the amount of tax without paying it to the State Exchequer only because the High Court granted orders restraining the State from recovering amount from the assessee, no act of the Court shall cause prejudice to any party. The prestine doctrine couched in the maxim "actus curiae neminem gravabit"

has ever remained a salutary and guiding principle. The contention that as the courts granted injunction restraining the State from recovering the tax amount as per Section 6B would raise the presumption that the Court was then satisfied of the bona fides of the contention is too fragile for depriving the State of the statutory right of interest incorporated in Section 10A of the Act. Interim orders are passed by the Court on variety of considerations one among being the strained financial position of the person approaching the Court. Merely because the Court granted interim order it cannot be inferred that the Court was then satisfied of a strong prima facie case for the appellant. On the contrary, it is well nigh settled that there is always a presumption in favour of the constitutionality of a legislative act. The presumption cannot be other way around."

15. The decision relied on by the learned counsel in KANORIA CHEMICALS AND INDUSTRIES LTD. AND OTHERS U.P.STATE ELECTRICITY BOARD AND OTHERS reported in 1997(5) S.C.C. 772 instead of supporting the case of the petitioner, rather advance the case of the Revenue. In that case, the Supreme Court has held thus:

"Stay of operation of order or notification only means the order or notification which has been stayed would not be operative from the date of passing of the stay order and it does not mean that the order or notification has been wiped out from existence. An order of stay granted pending disposal of the writ petition comes to an end with the dismissal of the substantive proceeding and it is the duty of the court in such a case to put the parties in the same position they would have been but for the interim orders of the court."

The Supreme Court further held thus:

"The grant of stay of the notification in the instant case had not the effect of relieving the petitioners of their obligation to pay late payment surcharge/interest on the amount withheld by them when their writ petitions were dismissed ultimately. Holding otherwise would mean that even though the Electricity Board, who was the respondent in the writ petitions succeeded therein, yet would be deprived of the late payment surcharge which was due to it under the tariff rules/regulations. It would be a case where the Board suffers prejudice on account of the orders of the court and for no fault of its."

In that case, the Supreme Court further held thus:

"The decision in Adoni Ginning Factory case((1979) 4 S.C.C. 560) does not lay down the proposition that in respect of the period covered by the stay, no payment can be made. No such proposition can be deduced for the reason that the liability for the said period was not at all in issue in the said decision. Unless put in issue and pronounced upon, it cannot be said that there was a decision on the said issue.

Thus, the Supreme Court explained and distinguished the decision of Adoni Ginning Factory.

16. The other decision relied on by the learned counsel for the petitioner is CONSOLIDATED COFFEE LTD. VS. AGRICULTURA INCOME TAX OFFICER, MADIKERI AND OTHERS reported in (2001) 1 S.C.C. 278, wherein Section 42(1) of the Karnataka Agricultural Income Tax Act, which provides for levying of penalty for belated payment has been considered and the Supreme Court distinguished the penalty from the interest and held thus:

"Section 41 contemplates the payment of interest when an assessee seeks time for payment of the tax due. A provision in regard to interest is also to be found in Section 61 of the Act. There was, therefore, no good reason for the High Court to assume that what Section 42 contemplated was in reality the payment of interest and not penalty. Interest is compensatory; penalty is penal, that is, punishing in character. Section 42 requires the payment of penalty by an assessee who has not paid the tax in time and the quantum of the penalty increases with the delay."

The Supreme Court further held that during the period of stay, the assessee is not in default and could not be subjected to penalty under Section 42 which speaks of an assessee in default. That is not the position in the present case. What is demanded is only an interest, which is compensatory in nature and not penalty from assessee in default.

17. The yet another decision relied on by the learned counsel for the petitioner viz., FOOD CORPORATION OF INDIA VS. STATE OF HARYANA AND ANOTHER reported in 2000 (3) S.C.C. 495 is also not applicable to the facts of the present case. In that case, during the period from 1 7.5.1975 to 6.1.1997, the tax on levy transaction was held to be unconstitutional by the Punjab and Haryana High Court. That decision was not challenged by the State. However, in the year 1982, a demand notice was issued levying sales tax on the turnover involving levy transaction. That demand was held constitutional by the Supreme Court on being taken before it. Consequent to that, the appellant paid the tax in respect of the assessment year 1975-76 also. However, the Revenue demanded interest under Section 59 of the Haryana General Sales Tax Act for the assessment year 1975-76. The levy being upheld by the High Court, the Supreme Court held that during the period from 17.5.1975 to 6.1.1997, the law declared by the High Court was that the State of Harayana did not have the constitutional authority to impose sales tax on levy transactions. Therefore, until 6.1.1997, the State of Haryana could not have made a demand for the payment of sales tax on levy transactions. The declaration of law made by the Supreme Court empowered the State to raise a demand even for the assessment year 1975-76. The valid demand for the assessment year 1975-76 could have been made only after the judgment of the Supreme Court i.e., from 6.1.1997. Therefore, the State could not have demanded interest on the tax due for the year 1975-76 based on earlier demand.

The admitted factual position of the present case is totally different. Hence, the cited case has no application to the facts of the present case.

18. Now, let us consider the other contention of the learned counsel for the petitioner that interest under Section 24(3) of the Act could be leviable only for the period subsequent to the assessment of sales tax in the final assessment order framed for the relevant assessment year. Further, in the present case, the tax on the turnover under Section 3-A of the Act has been paid even prior to final assessment was passed and as such no interest could be levied under Section 24(3 ). In order to appreciate the above contention, we feel it apposite to refer certain provisions of the TNGST Act, which are relevant to the point in issue:

Section 24(3) of the Act provides that on any amount remaining unpaid after the date specified for its payment as referred to in subsection (1) or in the order permitting payment in instalments, the dealer or person shall pay, in addition to the amount due, interest at 2 percent per month of such amount for the entire period of default.

Section 24(1) provides that save as otherwise provided for in Subsection (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 21 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 payments, 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 the Act.

Section 13(2) provides that 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 period 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.

The relevant rules for enforcement of Section 13(2) are Rule 18(1) to (4) of the Tamil Nadu General Sales Tax Rules, which are as follows:

"18.(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 of 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 20 th of the succeeding month. 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 sections 3, 3-A, 3-B, 4, 7-A or 7-C for the month to which the return relates after deducting therefrom the amount, if any, claimed as refund due 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 determine 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."

19. The conspectus of the provisions clearly states that the dealer shall submit the return showing the actual turnover for each month and the return for each month shall be submitted so as to reach the assessing authority on or before 20th of succeeding month and along with the return, the assessee shall also submit proof of payment as specified in sub-rule (1) of Rule 55 for the full amount of tax payable. If the tax is not paid as in this case, Section 24(3) provides that on any amount remaining unpaid after the specified date, the dealer shall pay in addition to the amount due interest at 2 percent per month on such amount for the entire period of default. Even the liability to pay the 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).

20. Much reliance has been placed by the learned counsel for the petitioner on the decision of J.K.SYNTHETICS LTD. VS. COMMERCIAL TAX OFFICER reported in 94 S.T.C. 422 to contend that the interest under Section 24(3) could be levied only for the period subsequent to assessment of sales tax in the final assessment are made. The petitioner paid the amount even prior to final assessments were made. Hence, there can be no question of payment of interest. The said contention is raised only for rejection on the simple reason that Sections 7(2), 7(2 A) and 11B of the Rajasthan Sales Tax Act, which were considered in the said decision are not pari materia provisions of Sections 13(2), 24 (1) and 24(3) of the TNGST Act and Rule 18(2) of the TNGST Rules with which we are concerned.

21. Section 11B of the Rajasthan Sales Tax Act, which was considered in the above cited decision at the relevant time was as follows:

"11B. Interest on failure to pay tax, fee or penalty:-

(a) If the amount of any tax payable under sub-sections (2) and (2A) of the section 7 is not paid within the period allowed, or

(b) If the amount specified in any notice of demand, whether for tax, fee, or penalty, is not paid within the period specified in such notice, or in the absence of such specification, within 30 days from the date of service of such notice, the dealer shall be liable to pay simple interest on such amount at one per cent per month from the day commencing after the end of the said period for a period of three months and at one and a half per cent per month thereafter during the time he continues to make default in the payments."

Section 7(2) and (2A) as then in force read as under:

"(2) Every such return shall be accompanied by a treasury receipt or receipt of any bank authorised to receive money on behalf of the State Government, showing the deposit of the full amount of tax due on the basis of return in the State Government treasury or bank concerned."

(2A) Notwithstanding anything contained in sub-section (2), the State Government may by notification in the Official Gazette require any dealer or class of dealers specified therein, to pay tax at intervals shorter than those prescribed under sub-section (1). In such cases, the proportionate tax on the basis of the last return shall be deposited at the intervals specified in the said notification in advance of the return. The difference, if any, of the tax payable according to the return and the advance tax paid shall be deposited with the return and the return shall be accompanied by the treasury receipt or receipts of any bank authorised to receive money on behalf of the State Government, for the full amount of tax due shown in the return."

22. Rule 25 of the Rajasthan Sales Tax Rules, 1955 provides that the return referred to in section 7(1) shall be in form ST 5 and shall be signed by the dealer or his agent. The said return has to be filed for such quarters ending with the last day of the months of June, September, December and March of every assessment year if the " previous year" of the dealer ends on 31st March of any year, and in other cases for each of the quarters of the year of accounts of the dealer. The rule further provides that if the return is not accompanied by a receipt showing deposit of tax as required by section 7(2), the assessing authority shall not be bound to take cognizance of the return. Column 11 of ST 5 return requires the dealer to indicate the turnover for the concerned quarter and permits certain deductions enumerated therein. The return has to be verified in the manner indicated at the foot of the form.

23. While considering the above provisions, the Supreme Court held that under Section 11B of the Rajasthan Sales Tax Act, the liability to pay interest on unpaid tax amount accrued on the dealer in two situations only, viz., (i) failure to pay the tax due under sub-sections (2) and (2A) of Section 7 and (ii) failure to pay the tax within the time allowed by the notice of demand or thirty days from the receipt of the notice by the dealer. Section 11B a s it was nowhere provided for payment of interest on the unpaid tax amount as found on final assessment from the date of the filing of the return under Section 7 of the Act. If the amount of tax payable under sub-section (2) is paid on the basis of return, not on the basis of final assessment, there can be no question of payment of interest under clause (a) of section 11B. Similarly, if the tax is paid according to the return as required by sub-section (2A), in other words, if the full amount of "tax due" shown in the return is paid, there can be no question of charging interest under clause (a) of Section 11B. So far as clause (b) is concerned, it is a post-assessment situation. The Supreme Court further held that the conjoint reading of Section 7(1), (2) and (2A) and Section 11B of the Act leaves no room for doubt that the expression " tax payable in Section 11B can only mean the full amount of tax which becomes due under sub-sections (2) and (2A) of the Act when assessed on the basis of the information regarding turnover and taxable turnover furnished or shown in the return. However, that is not the position under the provisions contained in Sections 13(2), 24(1) and 24(3) of the Tamil Nadu Act read with 18(2) of the Rules. Section 13(2) provides that the dealer has to pay tax in advance during the year on the basis of his "actual turnover for each month or such other period as may be prescribed". For this purpose, he may be required to furnish return showing his "actual turnover" for each month and pay tax on the basis of such return. Thus, the language employed in the Tamil Nadu provision as "actual turnover each month" and the requirement of the provision that the dealer has to furnish the return showing his " actual turnover each month and pay tax on the basis of such return is in contra distinction to the expression employed the "tax payable" under Section 11B of the Rajasthan Act, which only mean the full amount of tax becomes due under sub-sections 2 and 2A of the Act make clear that the provisions of the Rajasthan Act and the Tamil Nadu Act are not comparable provisions.

24. The task of establishing the above position of law has been made easier to us because the Division Bench of this Court in an earlier occasion considered the very question and rendered a detailed finding after taking into consideration of the very provisions of the Rajasthan Act and the TNGST Act in the case of GODREJ & BOYCE MANUFACTURING CO. LTD. VS. JOINT COMMISSIONER OF COMMERCIAL TAXES-IV AND OTHERS reported in 97 S.T.C. 44 and the Division Bench held as follows:

"Now, let us consider whether the principles laid down in the decision of the apex Court in J.K.Synthetics Ltd. v. Commercial Tax Officer (1994) 94 S.T.C. 422 relied on by the learned counsel for the appellant are applicable to the facts of the present case. The decision of the Supreme Court referred to above turned on the following facts:

the Commercial Taxes Officer in that case passed assessment orders relating to the assessment years 1975-76, 1976-77 and 1977-78 under the provisions of the Rajasthan Sales Tax Act, 1954 (Act 29 of 1954) and the Central Sales Tax Act, 1956. The returns were filed by the appellant in that case on the premises that the amount of freight charged in respect of sale of cement under the Cement Control Order did not form part of the sale price for the payment of Sales tax. In Hindustan Sugar Mills Ltd. vs. State of Rajasthan and J.K.Synthetics Ltd. v. Commercial Tax Officer, Kota (1979) 43 STC 13 the apex Court held that freight element formed part of the price of cement and sales tax was leviable on the sale price inclusive of the freight amount. The appellant in that case was therefore, required to pay sales tax on the sale price, inclusive of the freight. The point that arose for consideration before the apex Court was, whether the appellant was liable to pay interest on additional sales tax, which had to be paid on the inclusion of freight amount in calculating the sale price. It was contended on behalf of the appellant that the interest under section 11B of the Rajasthan Sales Tax Act can be charged only for the period subsequent to the determination of sales tax under the final assessment order and that too after the expiry of the period allowed under the notice of demand issued on finalisation of the assessment. On the other hand, the Revenue in that case, contended that interest becomes payable from the date on which the original return was filed under section 7(2) or 7(2A) of the Rajasthan Sales Tax Act, as the case may be. The apex Court, on a consideration of Sections 7(2), 7(2A) and 11B of the Rajasthan Sales Tax Act and rule 25 of the Rajasthan Sales Tax Rules, held that the appellant in that case was not liable to pay interest under section 11B of the Rajasthan Sales Tax Act (as it stood prior to its substitution in 1979) on the additional sales tax from the date on which the original returns were filed, but interest had to be paid only for the period subsequent to the determination of sales tax under the final assessment after the expiry of the period allowed under the notice of demand. However, that is not the position under the provisions contained in sections 13(2), 24(1) and 24(3) of the Tamil Nadu Act read with rule 18(2) of the Rules under the provisions of Tamil Nadu General Sales Tax Act referred to above. The liability to pay interest arises, the moment the dealer fails to pay the full amount of tax in respect of the actual turnover for a particular month on the due date, i.e., the 20th of the succeeding month, irrespective of the date of filing of the return and that such liability to pay the interest at 2 percent per month for such amount of tax which remains unpaid after 20th of the succeeding month is automatic. As pointed out by the Division Bench of this Court in Apollo Tubes Limited v. Additional Deputy Commercial Tax Officer, Ranipet (1994) 93 STC 339 ; (1992) 2 MTCR 190, in such a case there need not be an order of assessment before interest is levied under section 24(3) of the Act. Section 24(3) does not refer to any assessment or any proceeding on behalf of the officers for purposes of passing an order of assessment. As pointed out by the Division Bench in the decision in Apollo Tubes Limited v. Additional Deputy Commercial Tax Officer, Ranipet (1994) 9 3 STC 339 (Mad.); (1992) 2 MTCR 190, section 24(3) merely says that on any amount remaining unpaid, after the specified date, the dealer shall pay, in addition to the amount due, interest at 2 percent per month on such amount for the entire period of default. The liability to pay interest is not only automatic, but the section enjoins 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). The apex Court in the decision referred to above was concerned with the interpretation of sections 7(2), 7(2A) and 11B of the Rajasthan Sales Tax Act which are not in pari materia with the provisions in sections 13(2), 24(1), 24(3 ) of the Act and rule 18(2) of the Rules with which we are concerned. It is seen from the discussion at page 437 in J.K.Synthetics Ltd. v. Commercial Taxes Officer (1994) 94 STC 422 that section 7(1) of the Rajasthan Sales Tax Act enjoins on every dealer that he shall furnish prescribed returns for the prescribed period within the prescribed time to the assessing authorities. By proviso to section 7(1), the time can be extended by not more than 15 days. The corresponding provision in the Tamil Nadu General Sales Tax Rules is rule 18(2) which says that the dealer shall submit the return so as to reach the assessing authority on or before the 20th of the succeeding month and along with the return the dealer should also submit proof of payment for the full amount of tax payable under any of the sections 3, 3-A, 3-B, 4, 5 or 7-A of the Act for the month to which the return relates. There is no provision in rule 18(2) of the Rules for extending the time for submission of the returns as provided in section 7(1) of the Rajasthan Sales Tax Act. We are of the view that inasmuch as the decision in J.K.Synthetics Ltd. vs. Commercial Taxes Officer (1994) 94 STC 422 turned on the interpretation of the provisions of the Rajasthan Sales Tax Act, which are not similar to the provisions under the Tamil Nadu General Sales Tax Act and Rules, the principles laid down by the apex Court in the said decision are not applicable to the facts of the present case."

(Emphasis supplied by us) The said decision of the Division Bench in all its fours applicable to the facts of the present case and binding on us. There is no change in any of the provisions of TNGST Act considered by the Division Bench in the said case. Hence, the 2nd contention of the petitioner is also vanished in this case.

25. The learned counsel has made a half-hearted argument that apart from the ground of restrictions contemplated under Article 286 of the Constitution, some other ground has also been taken in the earlier writ petition. As seen from the order, no such ground has been agitated before the Division Bench, which disposed of the writ petition as infructuous. When such being the position, the argument contra cannot be accepted. As already indicated, the prayer in the earlier writ petition itself is for a declaration that Section 4 of the Constitution 46th Amendment Act, 1982 insofar as it has inserted a new subclause (d) in Clause 29-A in Article 336 of the Constitution of India and likewise, the new charging Section 3-A and Section 2(g), 2(n) and 2(r) of the TNGST Act, 1959 as amended by Tamil Nadu Act, 24 of 1988 as ultra vires, whereas the entire sub-clause 29-A of Article 366 as amended by 46th amendment of the Constitution has been upheld as early as 1989 in 73 S.T.C. 370 referred above. However, the earlier writ petition has been filed in the year 1992. Hence, we are of the view that the filing of the earlier writ petition is not bona fide and the petitioner are liable for payment of interest under Section 24(3) of the Act.

26. In view of the above reasoning, we are of the considered view that the order of the Special Tribunal requires no interference.

In the result, the writ petitions are dismissed, but without any order as to costs. Consequently, the connected W.P.M.Ps are closed.

(V.S.S,J.) (K.R.P,J.) 27.03.2002 Index: Yes Website: Yes usk To:

1. The Assistant Commissioner (C T) Central Assessment Circle-III Chennai-600 006.

2. The Registrar Tamil Nadu Taxation Special Tribunal 2nd Floor, Singaravela Maaligai, Chennai-600 001.

Usk V.S.SIRPURKAR,J.

AND K.RAVIRAJAPANDIAN,J.

Order in W.P.NOs.3597 and 3598 OF 1999 27.03.2002

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