2005 Supreme(SC) 421

2005(4) Supreme 247
Supreme Court of India
(From Madras High Court)
S.N. Variava, Dr. AR. Lakshmanan & S.H. Kapadia, JJ.
E.I.D. Parry (India) Ltd. —Appellant
versus
Assistant Commissioner of Commercial Taxes, Chennai —Respondents
Civil Appeal Nos. 6448-6455 of 2002
With
Civil Appeal No. 4230 of 2003
All Decided on 3-5-2005
Counsel for the Parties :
For the Appellant : Joseph Vellapally, Sr. Advocate, C.N. Sree Kumar, Ms. M.L. Shyjatha, P.H. Parekh, E.R. Kumar, Ms. Ranjeeta Rohatgi, Advocates.
For the Respondent : T.L.V. Iyer, and S. Balakrishnan, Sr. Advocates, Subra­monium Prasad, K.K. Misra, Sree Narain Jha, R. Gopala Krishnan and Abhay Kumar, Advocates.

Important point
Under the provisions of the Tamil Nadu General Sales Tax Act, if tax has been paid on advance, in the monthly returns the advance should have been included as part of turnover.

Headnote:Tamil Nadu General Sales Tax Act, 1959—Sections 13 and 24(3)—Sugarcane (Control) Order made under Essential Commodities Act, 1955—Advance payment of tax—Whether includible in monthly turnover of assessees—Appellants, manufacturer of sugar, purchase sugarcane from farmers—Liability to pay minimum price statutorily fixed and an additional price—As the additional price could not be determined till the end of the sugar year, State Government advised the sugar producers to pay a price which was higher than the minimum price fixed under Clause 3—Additional price so paid was then adjusted against the price fixed under Clause 5A of the Sugarcane Control Order—In monthly returns, appellants showed their turnover on basis of minimum price paid by them and paid tax thereon—They indicated the additional price paid by them as per the advice of the Government but did not include it as part of the turnover and did not pay tax on such additional price—As and when the price, under Clause 5A, was fixed, ­appellants filed a revised return and paid tax on that—In the Assessment ­Order interest was sought to be char­ged on the price fixed from the date the sugar was purchased till payment of tax was made by appellants—Appellants challenged the demand for interest—Whether the advance paid, pursuant to the advice of the Government, can be considered to be price and thus includible in the monthly turnover of appellants—(Yes)—Whether interest under Section 24(3) can be charged on the price fixed or on the advance paid—(No).

       Held : Of course Clause 5-A price will not be known till much later. However the Government advice makes it clear that the advance payment is to be towards the Clause 5-A price. Thus so long as the advance made is less than or equal to the Clause 5-A price it is advance payment of price. However if anything more has been paid then that would not be price in the absence of a contract or any statutory provision. It will thus have to be held that in the monthly returns the advance should have been included as part of turnover. If tax has been paid on advance and it is found that excess payment has been made, refund of tax on the excess payment can be claimed. The question then arises whether interest, under Section 24(3) can be charged on the Clause 5-A price or on the advance and if so from what date. As has been noted hereinabove, the price fixed under Clause 5-A can only be decided on the basis of a formula set out hereinabove. It therefore cannot be decided at least till the end of the sugar year. In practice it is however decided much later. As the price would be an unknown, neither the assessee could predict what the price would be nor could the Assessing Officer, even on the basis of his best judgment, predict what that price would be. Therefore till the price under Clause 5-A is fixed there would be no question of an assessee including it in the monthly returns filed by him. A monthly return filed not showing the price fixed under Clause 5-A would neither be incorrect nor incomplete. It is only after the price under Clause 5-A is fixed that the assessee would be required to file a revised return showing the price fixed under Clause 5-A as part of his turnover. (Paras 8 and 9)

       Thus the Assessment Order levying interest on the entire price fixed under Clause 5-A and the Judgments of the Tribunal and the High Court upholding that are clearly erroneous. As stated above, the price fixed under Clause 5-A would not be known till much later. Thus, it would be impossible to show it in the monthly returns filed earlier. Of course as indicated earlier, Mr. Iyer is right the monthly returns should have included the amounts paid as advance in the turnover. The question still remains whether by not including them interest becomes payable on them under Section 24(3). (Para 10)

       It is to be seen that under Section 13(2) tax could be paid in advance on the basis of monthly returns. A plain reading of Section 13(2) shows that the tax which has to be paid on the basis of such returns. If, as now contended by Mr. Iyer, the returns are incomplete or incorrect then, under Section 13(3), the Assessing Authority must, after giving a reasonable opportunity to the assessee, determine what was the tax payable and issue a notice to pay the tax within a particular period. The determination and collection under Section 13 would then be subject to such adjustments as may be prescribed on completion of the final assessment. (Para 11)

       Under Section 24(1) if the tax has been assessed or has become payable under the Act, then the payment has to be made within the said time as may be specified in the ­notice of assessment and tax under Section 13(2) has to be paid without any notice of demand. However, as seen above, the tax under Section 13(2), in the absence of any determination by the Assessing Authority, is tax as per the returns. If default is made in payment of such tax then interest becomes payable under the Act. In the present case, it is an admitted position that tax as per the monthly return had been paid within time. It is also an admitted position that there was no assessment, even provisional, by the Assessing Authority prior to the final assessment made after the revised returns had been filed. Interest becomes payable under Section 24(3) on an amount remaining unpaid after the date specified for its payment under sub-section (1) of Section 24. As seen above sub-section (1) of Section 24 deals with an assessed tax or tax which has become payable under the Act. In cases covered by Section 13(2) tax must be paid without any notice of demand. But as stated above, under Section 13(2) tax is to be paid “on the basis of such returns”. Tax as per the returns has admittedly been paid. If the returns were incomplete or incorrect as now claimed the assessing authority had to determine the tax payable and issue a notice of demand. In the absence of any assessment, even provisional, and a notice of demand no interest would be payable under Section 24(3). In this case, it is an admitted position that as soon as the revised return was filed the Appellants paid the tax as per the revised return. Therefore they paid the tax even before the final assessment took place. Thus the claim for interest, under Section 24(3) from the date that the advances were paid to the sugarcane growers is not sustainable. There is no provision under the Act which permits charging or interest unless and until there has been a provisional assessment and a notice of demand prescribing the period within which the tax was to be paid. (Para 12)