IMPORTANT POINT
An assessee is liable to pay interest u/s 10A of the Bengal Finance (Sales Tax) Act, 1941, on the turnover tax for the period during which recovery of the tax amount was stopped by orders of the High Court.

Headnote:(i) Taxation-Bengal Finance (Sales Tax) Act, 1941-Sections 6B and 10A-Interest payable by dealer -Imposition of tax on turnover of a dealer whose annual aggregate gross turnover exceeded Rs. Fifty lakhs-Writ Petitions challenging validity of Section 6B-High Court granted interim relief by injuncting State Government from collecting such tax on turnover-Writ petitions dismissed-Appellants remitted tax amount accordingly-Interest charged on tax amount payable by dealer during period of default-Demands challenged-Whether an assessee is liable to pay interest u/s 10A on turnover tax for period during which recovery of tax amount was stopped by orders of High Court ?-(Yes)
       Held : If a dealer has furnished only a truncated return that cannot be regarded as furnishing the return referred to in Section 10. It must be the full and accurate return. If a dealer makes just a statement by calling it a return it cannot be regarded as the return referred to in Section 10 of the Act. It is a different matter if the dealer would have committed some marginal errors in the return or there were some mistakes of a minor nature. (Para 7)
       Here it is admitted that the appellants have not mentioned the amount of turnover or the tax payable thereon in the return filed by them. If that be so the consequence is that they have failed to furnish a return which is "referred to in Section 10". The corollary is that there was failure to furnish the return as envisaged in sub-section (2). Thus, the liability to pay interest commenced under that sub-section at the very moment the assessing authority made the assessment under Section 11. Interest thereon would start accruing from the date prescribed for furnishing the correct return in accordance with Section 10. (Para 8)
       The State is empowered by the legislature to raise revenue through the mode prescribed in the Act so the State should not be the sufferer on account of the delay caused by the taxpayer in payment of the tax due. The provision for charging interest would have been introduced in order to compensate the State (or the Revenue) for the loss occasioned due to delay in paying the tax. (Para 10)
       We are, therefore, not adopting a construction which would upset or even impair the purpose in introducing Section 10A in the Act. The return to be filed by the dealer is the full and correct return as referred to in Section 10 and on failure to furnish such a return the liability to pay interest from the prescribed date would arise when assessment is completed. (Para 11)
       The tax amount which they should have paid as per Section 6-B remained with the 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 utilize it for public purposes. When appellants 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 that 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. (Para 14)
       Merely because the court granted interim orders it cannot be inferred that Court was then satisfied of a strong prima facie case for the appellants. On the contrary, it is well neigh settled that there is always a presumption in favour of constitutionality of a legislative act. The presumption cannot be the other way around. (Para 15)
       (ii) Equity-When interpreting a provision in a taxing statute a construction which would preserve the purpose of the provision must be adopted-In interpreting a taxing statute normally, there is no scope for consideration of principle of equity. (Para 10)

JUDGMENT

Thomas, J.-The question raised in all these appeals is whether an assessee is liable to pay interest under Section 10A of the Bengal Finance (Sales Tax) Act, 1941, on the turnover tax for the period during which recovery of the tax amount was stopped by orders of the High Court. West Bengal Taxation Tribunal answered the said question against the appellants and hence these appeals by special leave.

2. For dealing with the aforesaid question, only necessary facts need be mentioned: A new provision (Section 6B) was included in the Bengal Finance (Sales Tax) Act, 1941, (hereinafter referred to as the Act for short) and an identical provision was included in the West Bengal Sales Tax Act, 1954 as Section 4AAA. The effect of the new provision was that they imposed a tax on the turnover of a dealer whose annual aggregate gross turnover exceeded Rs. Fifty lakhs. The provisions came into force on 1.4.1979. These appellants were concerned with Section 6B of the Act and hence, they filed writ petitions before the Calcutta High Court challenging the validity of the aforesaid provision. The High Court, on admission of the writ petitions, granted interim relief by injuncting West Bengal Government from collecting such tax on the turnover, but ultimately the writ petitions were dismissed. Thus, liability of the appellants to pay tax on the turnover became conclusive and appellants remitted the tax amount accordingly. But in the meanwhile, Government of West Bengal introduced yet another provision as Section 10A in the Act by which interest at the rate of 2% per month was charged on the tax amount payable by the dealer during the period of default. So demands were made on the appellants to pay interest on the tax amount.

3. Appellants disputed their liability to pay such interest mainly on two grounds. First is that since appellants have furnished the returns and paid full tax as per such returns they are not liable to pay interest under Section 10A of the Act. Second is, even otherwise they are not liable to pay interest on the tax amount as its non-recovery was the effect of the injunction order granted by the High Court.

4. West Bengal Taxation Tribunal, before which the appellants challenged the demand for payment of interest, dismissed the petitions filed by the appellants. For considering the contention of the appellants a perusal of Section 10A is necessary. Section 10A of the Act reads thus :

"10A. Interest payable by dealer.-(1) Where a registered or certified dealer furnishes a return referred to in Section 10 in respect of any period by the prescribed date or thereafter, but fails to make full payment of tax payable in respect of such period by such prescribed date, he shall pay a simple interest at the rate of two per centum for each English calendar month of default from the first day of such month next following the prescribed date up to the month preceding the month of full payment of such tax or upto the month prior to the month of assessment under Section 11 in respect of such period, whichever is earlier, upon so much of the amount of tax payable by him according to such return remains unpaid at the end of each such month of default.

Provided that where such dealer admits in writing that the amount of tax payable in respect of such period is an amount which is either more or less than, what has been originally shown as payable in the return and where the Commissioner is satisfied on the point of such admission, the interest shall be payable upon so much of the amount of tax payable according to such admission as remains unpaid at the end of each such month of default.

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1997 Supreme(SC) 909

IMPORTANT POINTAn assessee is liable to pay interest u/s 10A of the Bengal Finance (Sales Tax) Act, 1941, on the turnover tax for the period during which recovery of the tax amount was stopped by orders of the High Court.

Cases Referred (5)

IMPORTANT POINT
An assessee is liable to pay interest u/s 10A of the Bengal Finance (Sales Tax) Act, 1941, on the turnover tax for the period during which recovery of the tax amount was stopped by orders of the High Court.