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2016 Supreme(Cal) 802
IN THE HIGH COURT AT CALCUTTA
Sanjib Banerjee, J.
Hindusthan Engineering and Industries Ltd. - Petitioner
Versus
Assistant Commissioner, Commercial Taxes, Corporate Division & ors. – Respondents
W.P. 3012(W) of 2016
Decided On : 08-03-2016
For the Petitioner: Mr. Sumit Kumar Chakraborty, Mr. Rajarshi Chatterjee, Ms. Payel Verma
For the State : Mr. Abhratosh Majumder, Mr. Prithu Dudharia, Mr. Soumitra Mukherjee
The interest component relatable to any arrear tax in dispute is liable to be waived under Section 7 of the West Bengal Sales Tax (Settlement of Dispute) Act, 1999.
Headnote:
WEST BENGAL SALES TAX (SETTLEMENT OF DISPUTE) ACT, 1999 - SEC. 7(1)(B) - INTEREST WAIVER - ARREAR INTEREST IN DISPUTE - CALCULATION OF INTEREST ON DELAYED PAYMENT OF TAX - WAIVER OF INTEREST RELATABLE TO ADDITIONAL DEMAND OF TAX - INTERPRETATION OF SECTION 7(1)(B) OF THE ACT - APPLICABILITY TO INTEREST COMPONENT RELATABLE TO ADDITIONAL LEVY OF TAX
Fact of the Case:
The petitioner challenged an order dismissing its application under the West Bengal Sales Tax (Settlement of Dispute) Act, 1999 for failure to pay interest of Rs. 59,84,917/-. The interest was levied on account of delay in payment of tax and a small component for additional levy of tax.
Finding of the Court:
The court held that the petitioner was not entitled to waiver of the entire interest amount of Rs. 59,84,917/- under Section 7(1)(b) of the Act, as the interest component was not relatable to the additional levy of tax challenged in the appeal and revision. However, the petitioner was entitled to waiver of the interest component relatable to the additional demand of tax of Rs. 2,41,660/-.
Issues: Whether the petitioner was entitled to waiver of the entire interest amount of Rs. 59,84,917/- under Section 7(1)(b) of the West Bengal Sales Tax (Settlement of Dispute) Act, 1999.
Ratio Decidendi: The court interpreted Section 7(1)(b) of the Act and held that the interest component relatable to any arrear tax in dispute is liable to be waived. However, in this case, the interest component of Rs. 59,84,917/- demanded by the order of assessment was not relatable to the additional levy of tax challenged in the appeal and revision, and hence the petitioner was not entitled to waiver of the entire interest amount.
Final Decision: The court set aside the impugned order and remanded the matter to the concerned settlement officer to calculate the amount of interest relatable to the additional demand of tax of Rs. 2,41,660/- by the order of assessment for waiver of such component and not the entirety of the interest amount of Rs. 59,84,917/-.
The petitioner has challenged an order of October 29, 2015 by which the petitioner’s application under the West Bengal Sales Tax (Settlement of Dispute) Act, 1999 filed on August 31, 2015 has been dismissed upon the petitioner failure to pay an amount of interest of Rs.59,84,917/-.
2. An assessment order was made in respect of the petitioner for the four quarters ended March 31, 2010 under the West Bengal Sales Tax Act, 1994. Such order noticed that a total payment of Rs.4,91,67,817/- had been made by the petitioner against a total assessed amount of Rs.4,94,09,477/-. The assessment order provided for a penalty of Rs.1,50,000/- and an interest component of Rs.59,84,917/-. A detailed calculation on account of the interest was indicated in the assessment order. The calculation showed the quantum of interest payable over the four quarters at varying rates. It is evident that the net amount due from the petitioner on account of sales tax was assessed and the amount actually paid by the petitioner was seen, to arrive at the short-fall on the relevant dates to calculate the quantum of interest payable over the four quarters by the petitioner. Thus, the calculation of the interest as evident from the relevant assessment order is on account of the delay in actual payment of tax by the petitioner and a small component thereof is the interest levied for the short payment of tax.
3. Over the entire financial year, the petitioner’s short payment of tax amounted to about Rs.2.41 lakh. Thus, the total interest component of Rs.59,84,917/- calculated in the relevant assessment order contained a substantial part on account of the delay in making payment of the tax and a nominal part on account of the additional levy of tax for which no payment had been tendered. It cannot be said by any stretch of imagination that the entirety of the interest of Rs.59,84,917/- indicated in the relevant assessment order pertained to the additional levy of tax made thereunder.
4. After exhausting the remedy of appeal, the petitioner challenged the order of assessment in revision. Both the additional levy of tax and the quantum of interest awarded by the relevant assessment order were challenged in the appeal and in the revision.
5. During the pendency of the revision, on the basis of the amended provisions as to settlement in the said Act of 1999, the petitioner applied for settlement of the tax in dispute and the interest thereon by paying 55% of the tax in dispute. The amount of tax in dispute was Rs.2,41,660/-. The petitioner now says that Section 7(1)(b) of the Act applies in this case. Such provision, in its material part, reads as follows:
“7. Rate applicable in determining the amount payable. - (1) The amount payable by an applicant for settlement of dispute under this Act shall be determined under sub-section (2) of section 6 –…
(b) where the dispute relates to any arrear interest in dispute for non-payment of any arrear tax in dispute and an application has been made under this Act in respect of such arrear tax in dispute, by waiving the arrear interest in dispute.”
6. Thus, the interest component relatable to any arrear tax in dispute is liable to be waived under Section 7 of the Act of 1999. The words of clause (b) clearly stipulate that if a component of the tax is disputed, the interest relatable thereto would be regarded as “arrear interest in dispute”. It is only such arrear interest in dispute “in respect of … arrear tax in dispute” that may be waived.
7. In this case, the petitioner has deposited the additional levy of Rs.2,41,660/- and has also questioned the imposition of the interest of Rs.59,84,917/- in the revision. However, the amount of Rs.59,84,917/- is not relatable to the additional levy of Rs.2,41,660/-. The relevant order of assessment indicates how the figure of Rs.59,84,917/- was arrived at by determining the dates when the sales tax ought to have been tendered and when the same was actually tendered. There is no doubt that a com
