The Commissioner Of Sales Tax vs Qureshi Cruchible Center

1. This appeal is preferred against the judgment of a learned single Judge of the Allahabad High Court allowing the Sales Tax Revision filed by the assessee. The matter arises under the U.P. Sales Tax Act. Section 8(1) of the U.P. Sales Tax Act reads as follows:

8(1). Payment and Recovery of Tax.- (1)The tax admittedly payable shall be deposited within the time prescribed or by the thirty first day of August, 1975, whichever is later, failing which simple interest at the rate of two per cent (per Mensem) shall become due and be payable on the unpaid amount with effect from the day immediately follow ing the last date prescribed or with effect from the first day of June, 1975, whichever is later and nothing contained in Section 7 shall prevent or have the effect of postponing the liability to pay such interest.

Explanation.- For the purposes of this sub-section, 'the tax admittedly payable' means the tax which is payable under this Act on the turnover of sales or, as the case may be, the turnover or purchases, or of both, as disclosed in the accounts maintained by the dealer or admit by him in any return or proceeding under this Act whichever is greater, or, if no accounts were maintained then according to the estimate of the dealer.

According to this section, a dealer shall have to deposit the tax admittedly payable either within the time prescribed or by the 31st day of August, 1975 whichever is later. If he fails to do so, simple interest at the rate of 2% per mensem becomes payable. This levy of interest is by operation of law. It does not require a separate order as such by any authority. The explanation defines the expression "tax admittedly payable". It means the tax which is payable, inter alia, according to the return filed by the dealer.

2. In this case, the dealer filed a return for the assessment year 1975-76. The goods in which he was dealing fell within the category of unspecified goods. For unspecified goods, the rate of tax prior to 1-12-1973 was 3.5%. with effect from the said date, however, the rate was revised to 7%. In the return filed by the respondent-assessee, he arrived at the tax admittedly payable op the turnover disclosed by him, by applying rate of 3.5%. The authorities held that in as much as he has not paid the tax admittedly payable within the meaning of Section 8(1) in as much as he has not calculated and paid the tax at the rate prescribed by law he must be held to have failed to comply with the requirement of Section 8(1). Accordingly, interest as prescribed by the said section was levied. The appellate authority as well as the Tribunal affirmed the said levy. The matter was carried to the High Court by way of a revision. The learned Judge allowed the revision holding that "there have been no finding by the Tribunal that the assessee acted mala fide in not depositing the tax at the rate of 7%. The demand of interest was not justified.".

3. We are unable to see any relevance of the mala fides in this case. Section 8(1) does not say that the non-payment should be mala fide. This is also not a case where the rate of tax applicable was in dispute or disputed by the dealer. This is simply a case where the dealer calculated the tax at an inapplicable rate. He did not and could not plead ignorance of the change in rate of tax effected two years earlier. In the circumstances, the concept of mala fides was not relevant in the context.

4.The learned Counsel for the respondent-assessee relied upon a judgment of a Division Bench of the Allahabad High Court in Annapurna Biscuit Co. v. State 1980 UPTC 1320. It was held in that case that in a given case, dealer may raise a dispute about the taxability or about the rate and in such a case a question may arise as to taxability or with respect to the appropriate rate of tax applicable. In that context, it was observed that it has to be seen whether the plea of the assessee was bona fide or not. It was held : "So long as the calculation is honest and fair, the dealer shall not incur any liability to pay interest." We are unable to see the relevance of the said principle here. In this case, there Was no dispute either with respect to the classification of goods or the rate of tax, as stated hereinbefore.

5.For the above reasons, we hold that the learned single Judge was not justified in deleting the interest levied by the authorities. The appeal is accordingly allowed and the order of the learned single Judge is set aside. The order of the assessing authority levying interest under Section 8(1) is restored. No costs.