The main legal point established in the judgment is that interest under Section 24(3) of the TNGST Act can be imposed only if an assessment has been framed, determining the additional turnover and raising a demand upon the assessee. The judgment also emphasizes the automatic levy of interest in the case of self-assessment and the requirement for a fresh demand notice in case of variation between original demand and demand consequent upon an appellate order.

JUDGMENT :

Prayer: Writ Petition filed under Article 226 of the Constitution of India praying to issue a writ of Certiorarified Mandamus calling for the records of the respondent in his proceedings in TNGST/0943709/2006-07 dated 19.08.2020 and quash this revised assessment order passed on 19.08.2020 by levying penal interest for the Additional Sales Tax which was already paid, as illegal and direct the respondent to act as per law.

1. Heard Mr. C.Baktha Siromani, learned counsel for the petitioner and Mr.ANR.Jayaprathap, learned Additional Government Pleader for the respondent.

2. The petitioner is an assessee for the purposes of Tamil Nadu General Sales Tax Act, 1959 (in short 'TNGST Act') on the file of the respondent/Assessing Officer. The challenge is to an order of assessment dated 19.08.2020 under which interest under section 24(3) of the Act has been levied for delayed remittance of Additional Sales Tax (AST).

3. The sequence of events that are relevant to deciding this matter, are as follows. The proceedings impugned are for the period 2006-07 for which the petitioner has filed monthly returns of turnover in Form A-1. Taxable turnover of Rs.23.50 (approx.) crores was reported and tax was remitted thereupon. There is no dispute in regard to the position that this reflects the correct position both in terms of the turnover as well as the tax computed thereon.

4. The returns culminated in an order of assessment dated 30.03.2011 to the effect that the petitioner had paid excess tax of an amount of Rs.1451/-. Tax on additional sales had also been remitted and there were 'nil' arrears.

5. However, the petitioner had a liability to AST under the Tamil Nadu Additional Sales Tax Act, 1970 (in short 'TNAST Act'), as its turnover fell within the slab of Rs.10 to 25 crores.

6. A notice thus came to be issued on 10.11.2009 calling upon the petitioner to remit a sum of Rs.23.50 (approx.) crores towards AST, computed at 1% on the taxable turnover, within a period of three days of receipt of notice, failing which coercive action in terms of the Revenue Recovery Act, 1864 was threatened.

7. Immediately on receipt of the notice, the petitioner, under cover of letter dated 26.11.2009, effected part payment promising to pay the balance in four equal monthly installments. There is no dispute on the position that the petitioner has adhered to the scheme of installments as promised.

8. On 22.12.2009, a notice was received by the petitioner on the ground that interest had not been remitted on the delayed payments of AST. The AST on the turnover was due on 21.04.2007, being the date for annual return for the period 2006-07, but had been paid only on 30.11.2009, with a delay of 953 days. The petitioner was thus, called upon to remit interest within 7 days from date of notice.

9. The notice was challenged in W.P.No.1640 of 2010 which came to be disposed by this Court on 14.08.2019 directing the Assessing Authority to consider the objections raised by the petitioner and pass orders after hearing the petitioner.

10. Notice dated 16.12.2019 was issued setting out the methodology of computation of interest as per the provisions of Section 24(3) of the Act, and re-quantifying the delay at 1044 days. Representation dated 27.01.2020 came to be filed thereafter, requesting the deferment of interest, relying upon the judgment of the Supreme Court in E.I.D. Parry (India) Ltd. V. Assistant Commissioner of Commercial Taxes (113 VST 233) and a decision of a Division Bench of this Court in Kone Elevator India Ltd. V. Commercial Tax Officer, Mandaveli Assessment Circle, Chennai (27 VST 577).

11. The impugned order has come to be passed on 19.08.2020 rejecting the objections raised. The Assessing Authority relies upon the provisions of Section 2(aaa) of the TNAST Act, inserted vide Tamil Nadu Additional Sales Tax (Amendment) Act, 2005 (Act No.14 of 2005), that provides for levy of interest in line with Section 24(3) of the TNGST Act on interest remaining unpaid under the T