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High Court Of Calcutta
Amitava Lala
DALHOUSIE JUTE COMPANY - Appellant
Versus
COMMERCIAL TAX OFFICER, CENTRAL SECTION, ASSESSMENT WING - Respondent
W. P. 716 Of 2000
Decided On : 04/17/2000
{'KEYWORD': 'Central Sales Tax Act, 1956', 'SUBJECT': 'Refund of Interest Paid Under Central Sales Tax Act', 'ACT SECTION LIST': 'Central Sales Tax Act, 1956, Section 9', 'SUMMARY': 'The court held that interest levied under the Central Sales Tax Act for the period of four quarters ending on March 31, 1985 was wholly illegal. The court directed the authorities to refund the interest paid by the petitioner.'}
Fact of the Case:
The petitioner, a jute manufacturing company, filed returns and paid taxes under the Central Sales Tax Act, 1956, but there was a delay in making payment of tax. The respondent assessed the petitioner and levied interest for late payment of taxes. The petitioner challenged the assessment and the demand for interest.
Finding of the Court:
The court held that there is no independent provision for assessment under the Central Sales Tax Act and that the provisions of the general sales tax laws of the state apply to the Central Act. The court further held that Section 9 of the Central Sales Tax Act, which provides for the levy, collection of tax and penalties, does not provide for the levy of interest on Central sales tax. Therefore, the assessment of interest by the respondent was illegal.
Issues: Whether interest can be levied under the Central Sales Tax Act, 1956 Whether the petitioner is entitled to a refund of the interest paid.
Ratio Decidendi: The court relied on the Supreme Court judgment in India Carbon Ltd. v. State of Assam, which held that the sales tax authorities of a State must apply the Central Sales Tax Act in assessing and collecting Central sales tax. The court also relied on the Kerala High Court judgment in South India Corporation Private Ltd. v. Assistant Commissioner (Assmt.), Sales Tax Office, Spl. Circle, Mattancherry, Cochin, which held that a writ petition can be filed for the refund of taxes collected without the authority of law.
Final Decision: The court allowed the writ petition and directed the authorities to refund the interest paid by the petitioner within a period of 6 weeks from the date of communication of the order.
( 1 ) THIS writ petition is basically made for the purpose of obtaining order or orders in the nature of withdrawal, cancellation and/or rescind a notice of demand in form VII-L, order of assessment charging interest under the Central Sales Tax Act, 1956 for the period of four quarters ending March 31, 1985 and the purported order dated January 19, 1995 passed by the respondent No. 2 confirming the order of assessment and purported notice dated December 6, 1993 issued by the respondent No. 3 so far the direction of making payment of interest under Central Act for the period of four quarters ending with March 31, 1985 and all proceedings relating thereto amongst others.
( 2 ) MR. Sumit Chakraborty, learned counsel appearing on behalf of the petitioner, contended before this Court that the petitioner is a unit of Hindusthan Development Corporation Limited Co. It carries on business of manufacturing jute goods from its jute mills within the State of West Bengal and also outside the State of West Bengal.
( 3 ) THE petitioner-company is a registered dealer under the West Bengal Sales Tax Act, 1994 and Central Sales Tax Act, 1956 and holding Registration Certificate Nos. AW/1007 and 1007/ (AW) Central respectively.
( 4 ) IT is well-known that jute industry of the country has been passing through acute financial crisis for various grounds including general recession. There was a change in the management in February, 1981. The new Board of Directors took all the responsibilities of the company including the liabilities under the Central Act. The petitioner filed necessary returns under the Central Act in respect of the period of four quarters ending on March 31, 1985. The petitioner also paid the taxes but admittedly, there was a delay in making payment of tax.
( 5 ) THE respondent No. 1 assessed under the Central Act and levied tax to the extent of Rs. 37,79,941. 57. A sum of Rs. 20,000 was imposed as penalty for late payment of tax. Since the petitioner paid the tax along with return for a sum of Rs. 38,00,308 along with returns in fact, payment was made in excess of Rs. 366 after deducting the levy of tax and penalty.
( 6 ) THE respondent No. 1 was also assessed the petitioner by separate order of assessment and demanded under the Central Act for late payment of taxes. The demand of interest under the Central Act was made taking recourse to Section 10a of the Bengal Finance (Sales Tax) Act, 1941. Along with the order of assessment for interest the respondent No. 1 issued notice of demand for interest for the period of four quarters ending with March 31, 1985 in form VII-L under the Central Act. The petitioner preferred an appeal from such order of assessment charging interest under Central Act for the period of four quarters ending with March 31, 1985 before respondent No. 2. Inspite of preferring the appeal, the petitioner paid a sum of Rs. 8,64,261 as against the claim of interest without prejudice to the rights and contentions of the parties. By an order dated January 19, 1985, the appeal was rejected confirming the order of assessment charging interest of Rs. 22,40,014 under the Central Act.
( 7 ) ON December 22, 1999, your petitioner was served with a notice by respondent No. 3 under Memo No. 171 (CD-210) 99-2000 dated December 6, 1999 directing the petitioner to make payment of the assessed dues towards interest under the Central Act for the period of four quarters ending on March 31, 1985 within a period of 7 days from the receipt of the notice.
( 8 ) UPON receipt of such notice on December 22, 1999, the petitioner made with his Advocate for the purpose of necessary advice when he came to know that in view of India Carbon Ltd. v. State of Assam, interest levied under the Central Act for the period of four quarters ending on March 31, 1985 was wholly illegal. It was further informed that following such Supreme Court judgment, this Court also in a case Re: Pacheria Castings Pvt. Ltd. in W. P. No. 2273
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