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Judgment
K. Raviraja Pandian, J.—In the above writ petition, the petitioner challenges the order of the Special Tribunal dated 8.7.1997 whereby the
prayer of the writ petitioner to quash the demand dated 2.11.1995 u/s 24(3) of the TNGST Act has been rejected.
The petitioner is a registered dealer in gold and silverwares and for the assessment years 1978-79 to 1981 -82 a revised assessment order u/s
16 of the TNGST Act was passed on 17.3.1988. The petitioner carried the matter on appeal before the first appellate authority, the Appellate
Assistant Commissioner, who by his order dated 8.3.1990 deleted the assessment made on the purchase turnover of old jewellery and old
silverwares and also deleted the addition made on the purchase as well as sales turnover. The penalty imposed was also reduced from 150% to
50%. On further appeal, the Tribunal sustained the turnover as found by the first appellate authority, however deleted the entire penalty by its order
dated 1.8.1991. Thereupon, the third respondent, assessing authority issued a fresh demand for payment of tax after giving effect to the order of
the appellate authority on 20.3.1995, which was served on the assessee on 22.3.1995.
It is the case of the petitioner that as per the demand, the petitioner was having 30 days time from the date of demand for payment of tax and he
paid certain portion of the demand even prior to the service of demand dated 20.3.1995 and discharged the balance amount on 11.10.1995.
However, the third respondent assessing authority called upon the petitioner to pay interest for the belated payment of the tax u/s 24(3) of the Act
by his demand dated 2.11.1995. The correctness of the said demand was put in issue by filing a writ petition in W.P.No.16361 of 1995 with a
prayer to quash the same. On constitution of the Special Tribunal the said writ petition was transferred and taken on file in T.P. No. 2642 of 1997.
Before the Special Tribunal, the petitioner challenged the correctness of the order of demand on the grounds that the provision of Section 24(3) of
the TNGST Act are not attracted to the facts of the case, since the arrears of tax has been paid within 30 days from the date of demand made on
20.3.1995, that the liability to pay the tax arises only after issue of demand after giving effect to the appellate authority''s order under Rule 32(2) of
the TNGST Rules that on issuance of such notice, the amounts were paid and as such there has been no default and therefore, no liability of
payment of interest u/s 24(3) arises and that the demand dated 20.3.1995 was belatedly issued by the authorities. All the three contentions were
negatived by the Special Tribunal. The correctness of the said order is now put in issue in the present writ petition.
The sum and substance of the arguments of the learned counsel for the petitioner is that u/s 24(3) of the TNGST Act interest is leviable only in a
case when the tax assessed or payable as per the return is defaulted. In the present case, the petitioner filed a return and also paid the tax as per
the return. The order by way of revision u/s 16 passed by the third respondent was modified by the appellate authority from time to time. Rule
32(2) contemplates that the order shall be given effect to by the assessing authority within three months from the date of communication of order.
The assessing officer shall refund the amount, if the dealer had paid the tax in excess after adjusting the arrears, if any and issue a refund voucher in
form ''C''. The amount of the tax is found to be due from the dealer, then the assessing officer shall raise a demand in Form B7 and the dealer shall
pay the same as demanded in the manner specified in the notice. If the amount as demanded is not paid then only Section 24(3) operates and
interest is payable.
In this case, no specific dates for the payment of tax has been given but very casually stated that substantial portion of tax was paid before the
notice in B7 and the balance was paid immediately thereafter. The contention as averred in the affidavit is extracted below:-
The third respondent passed a fresh order dated 20.3.1995 giving effect to the orders of the Appellate Authority. The said order was served on
the petitioner only on 22.3.95. A further period of 30 days is available to the petitioner to remit the demand. Out of the entire demand, the
petitioner paid a substantial amount even before the service of the order dated 20.3.95. The balance of the amount was paid on 30.6.95
(Rs.1,00,000) and a sum of Rs.99,373/- was paid on 11.10.95. Assuming without conceding the fact that there was a delay in remitting the
amount it can be only from the 31st day of the service of the demand and not before the said date as alleged by the respondent.
Section 24 of the TNGST Act provides for payment and recovery of tax. The above provision as originally stood was as follows:-
(1) The tax assessed under this Act shall be paid in such manner and in such installments, if any, and within such time, as may be specified in the
notice of assessment, not being less than twenty one days from the date of service of the notice. If default is made in paying according to the notice
of assessment, the whole of the amount outstanding on the date of default shall be come immediately due and shall be a charge on the properties of
the person or persons liable to pay the tax under this Act.
(2)....
(3) If the tax assessed under this Act or any instalment thereof is not paid by any dealer or person within the time specified therefore in the notice
of assessment or in the order permitting payment in installments, the dealer or person shall pay by way of penalty, in addition to the amount due a
sum calculated at the rate of 2% of such amount for each month or part thereof after the date specified for its payment,
Provided (first proviso) ....
Provided further that where a dealer or person has preferred an appeal or revision against any order of assessment under this Act, the penalty
payable under this sub-section, in respect of the amount in dispute in the appeal or revision, shall be postponed till the disposal of the appeal or
revision as the case may be and shall be calculated on the amount that becomes due in accordance with the final order passed on the appeal or
revision as of such amount had been the subject matter of the appeal or revision.
Though in the affidavit and in the argument nothing has been stated about the receipt of the demand made on the petitioner after revised
assessment was made u/s 16, it is clear from the observation of the Tribunal, such demand was served, which is as follows:-
In the instant case, it is not in dispute that after an order of assessment was made u/s 16 on 17.3.88, a notice of demand was issued and
therefore, the liability for payment accrued on the expiry of the notice period.
So it is evident from the facts that reassessment u/s 16 have been made in respect of the assessment years and a notice of demand dated
17.3.1988 as contemplated u/s 24(3) has also been issued. That is the precise reason that interest has been calculated in the demand, which was
impugned before the special Tribunal and made available in the typed set of papers at page 13A, from 13.5.1988 i.e. after the time allowed in the
notice. Thereafter, in view of the subsequent events of taking the matter on appeal before the first appellate authority and further appeal before the
second appellate authority, the recovery to be made pursuant to the assessment has been postponed till the disposal of the appeal or revision as
the case may be.
We are of the view that in order to appreciate the issue, it is apropos to note certain amendments made to Section 24 of the Act. The words
tax assessed under this Act"" appearing in sub-section (1) of Section 24 were substituted by the words ""tax assessed or has become payable under
this Act"" by Section 5 of the Second Amendment Act (22 of )1982 with effect from 1st November 1982 so as to make the sub-section applicable
not only to tax assessed but also to tax payable under this Act. Subsequently, the sub-section was further amended by Act (78 of) 1986 from 1st
January 1987.
Likewise the words "" tax assessed"" appearing at the commencement of sub-section (3) of Section 24 were substituted by words ""tax assessed
or has become payable "" and the words ""by way of penalty"" were substituted by the words ""by way of interest"" by Section 5 of the Second
Amendment Act (22 of) 1982 from 1st November 1982.
Likewise the rules were amended by G.O.3523 dated 27th December 1965 by providing that if any amount is found to have been due from
the dealer, the dealer shall pay the sum demanded in the manner specified in the notice Form B7.
It is pertinent to state here that the amended provision of Section 24 with effect from 1st November 1982 came to be challenged in several
writ petitions before this Court. The Division Bench of this Court in SAKTHI SUGARS LTD. VS. ASSISTANT COMMISSIONER OF
COMMERCIAL TAXES (1985) 59 STC 52, upheld the constitutional validity of Section 24 held however that the interest u/s 24(3) of the Act
does not become automatically payable in the case of a dealer, who has not deposited the entire tax, which is payable by him on the basis of the
monthly returns submitted as required by rule 18(3) of the TNGST Act. The context in which that finding was given by the Division Bench was that
a contention on behalf of the Revenue was raised that by virtue of amendment made incorporating the words ""tax assessed or has become
payable"" as per Rule 18, the assessee is liable to pay penalty from the date of expiry of the time allowed for filing the return, if the tax payable has
not been paid along with the return or within the time allowed for filing the return. While rejecting that contention, the Division Bench observed as
follows:-
An exercise of amendment of section 24(3) has been gone through and as already pointed out the opening words of section 24(1) and section
24(3) now refer to ""the tax assessed or has become payable"". It is possible that the introduction of the words ""tax has become payable"" was
intended to cover cases of non-payment of tax which had become payable under the alternative method of assessment in rule 18, and with a view
to make the shortfall or tax not paid, payable with interest u/s 24(3). This object, however, does not seem to have been achieved because the
event which originally attracted the liability u/s 24(3), namely, non-payment within the time specified therefore in the notice of assessment or in the
order permitting payment in installments has been retained as it was before. Consequently, unless it is first established that there was a notice of
assessment and there was non-payment, notwithstanding the amendment made in the opening words of section 24(3), a case of provisional
assessment under rule 18(3) will not be covered by even the amended provision.
In order to overcome the difficulties arose due to the Judgment of the Division Bench of this Court in Sakthi Sugars case as stated above, the
Government enacted the Special Provision and Validation Act called Tamil General Sales Tax (Special Provisions and Validating) Act 1998 , Act
22 of 1998. Section 2 of the Act 22 of 1998 reads as follows:
(2) Notwithstanding anything contained in subsection (3) of Section 24 of the principal Act, if the tax assessed or has become payable under the
principal Act or any instalment thereof is not paid within the time specified therefore in the notice of assessment or in the order permitting payment
installments, the dealer or person shall pay by way of penalty in addition to the amount due a sum equal to a sum calculated at the rate of two
percent of such amount for each month or part thereof after the date specified for its payment
Provided that if the tax assessed or has become payable under the principal Act or any instalment thereof is less than one hundred rupees, no
penalty shall be levied for a period of one month after the expiry of the time specified in the notice of assessment or the order aforesaid.
Provided further that where a dealer or person has preferred an appeal or revision against any order of assessment under the principal Act, the
penalty payable under this sub-section, in respect of the amount in dispute in the appeal or revision, shall be postponed till the disposal of the
appeal or revision, as the case may be, and shall be calculated on the amount that becomes due in accordance with the final order passed on the
appeal or revision as if such amount had been the subject matter of the appeal or revision.
As per the special provisions and Validation Act 22 of 1998 sub-section 2 of Section 2 of Act 22/98 (i.e. Section 24(3) of the TNGST as
amended) shall be deemed to have come into force on the 1st day of September 1977 and remained in force upto and inclusive of 31st day of
October 1982 i.e. the day preceding the date of effect of the amendment Act 22 of 1982 . By virtue of the above said Special provisions and
Validation Act 22 of 1998 the provision relevant to the assessment years 1978-79 to 1981-82 which are subject matter of the present writ petition
is as provided in the Special provisions and Validation Act as extracted above.
It is relevant here to refer to Form B3 and B7 which are provided in Rule 16 & 18 and Rule 32 to 34 respectively. Form B3 is notice of final
annual assessment and demand, which has been issued in the present case as found by the order of the Special Tribunal u/s 16 on 17.3.1988. The
form B3 reads as follows:-
FORM B-3
Please take notice that you have been finally assessed under the Tamil Nadu General Sales Tax Act, 1959, to a tax of Rs..... (Rupees ......) (in
words) only for the year ending ..... and that after deducting the total amount of the monthly payment(s)already made by you towards the tax for
that year, you have to pay a (further) sum of Rs. ..... (Rupees ....)(in words)only. This balance of the tax shall be paid within thirty days from the
date of service of this notice by inland money order (sales tax) in favour of the Sub-Treasury Officer or the Treasury Officer concerned or by
crossed cheque in favour of the undersigned or by remittance into the Government Treasury at .... or by crossed demand draft or by crossed
postal order or to the Commercial Tax Officer/ Joint Commercial Tax Officer/ Deputy Commercial Tax Officer/ Assistant Commercial Tax Officer
or to the Sales Tax Collection Inspector failing which the amount will be recovered as if it were an arrears of land revenue or fine imposed by a
Magistrate and you will also be liable to pay the penalty prescribed under sub-section (3) of Section 24 of the Act.
Form B7 is notice of revision of assessment and demand which reads as follows:
FORM B7
Please take notice that consequent on the modification of the original assessment made on appeal by the Appellate Assistant Commissioner/Sales
Tax Appellate Tribunal /High Court or on revision by the Deputy Commissioner/ Board of Revenue or any other authority in his / its order NO.....
dated the ..... the tax due from you is Rs....... (Rupees.... )(in words)only for the year ending ... and that after deducting the total amount of the
payments already made by you towards the tax for that year, you have to pay a further sum of Rs.....(Rupees .... ) (in words) only. This balance of
the tax shall be paid within thirty days from the date of service of this notice by inland money order (sales tax) in favour of the Sub-Treasury
Officer or the Treasury Officer concerned or by crossed cheque in favour of the undersigned or by remittance into the Government Treasury at ....
or by crossed demand draft or by crossed postal order or to the Commercial Tax Officer/ Joint Commercial Tax Officer/ Deputy Commercial Tax
Officer/ Assistant Commercial Tax Officer or to the Sales Tax Collection Inspector failing which the amount will be recovered, as if it were an
arrear of land revenue or fine imposed by a Magistrate .You will also be liable to pay the penalty prescribed under sub-section (3) of Section 24 of
the Act for the period from ...... viz., the date on which the amount becomes due as per the original assessment order to the date of actual payment
of the tax demanded in this notice.
By the above said statutory provision and the statutory forms prescribed with reference to the rules 16 and 18 and 32 to 34 respectively, it is
abundantly clear that the interest has to be calculated from the date specified in the notice of original assessment order. Second proviso to section
24(3) has postponed the collection of penalty payable in respect of the amount in dispute in the appeal or revision till the disposal of the appeal or
revision as the case may be and further provided such interest shall be calculated on the amount that becomes due in accordance with the final
order passed on the appeal or revision, as if such amount had been the subject matter of the appeal or revision. As seen from the above statutory
provisions the one and only conclusion that could be reached is that the liability which commenced u/s 24(3) for payment of tax is not snapped but
only postponed till the appeal or revision is disposed of and on such disposal the liability emanated from the order of assessment would continue till
the same is discharged by making the payment.
A contention , which is almost similar to the contention raised in the present case was raised in the case of SAKTHI SUGARS LTD VS.
ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (1985) 59 STC 52) on the construction of Section 24(3) that once installments
are granted by the Government all the earlier defaults are wiped out and no interest is payable u/s 24(3) for the period earlier to granting of
installments. That contention was rejected by the Division Bench by holding as follows:
.. Apart from this, it is difficult to see how if the installments are granted after a default has been committed, the earlier default is wiped out. On the
terms of Section 24(3), the starting point of the liability to pay interest is expressly specified and section 24(3) cannot be set at naught merely by
asking for installments and having them granted. Once the liability created u/s 24(3) is incurred, then the running of interest can be arrested only if
the payment of the tax due and payable is made.
Hence the contention of the learned counsel for the petitioner that the interest on the delayed payment could be calculated only after the expiry of
time granted in B7 notice cannot be accepted since it is against the very statutory provision as referred to above and against the decision made in
Sakthi Sugars Case referred to supra.
Learned counsel for the petitioner relied on the decision of the Division Bench of this Court in the case V.NAGARATHINAM AMMAL VS.
DEPUTY COMMERCIAL TAX OFFICER, SANKARI (1987) 67 STC 464. Though in that case, the facts are identical to the facts of the
present case, the provision obtaining at the relevant period was totally different. The provision of Section 24(3), which is applicable to the facts of
the present case is as brought out by the Tamil Nadu General Sales Tax (Special Provision and Validation) Act 1998, which is deemed to be in
force from the period from 21.9.1977 to 31.10.1982 and the same is relevant for the assessment years 1978-79 to 1981-82, which are under
consideration in the present case. Hence we are of the view that the said case would not in any way advance the case of the petitioner.
The learned counsel relied on another decision of the Supreme Court in the case of Food Corporation of India Vs. State of Haryana and
Another, . In that case, the imposition of sales tax by the State of Haryana on levy transaction undertaken by the assessee in the year 1973 was
declared to be beyond the constitutional authority of the State by the High Court and consequently quashed the assessment order and demand
notice issued by the Revenue by its order dated 17.5.1975. Subsequently in the year 1982, though judgment of the High Court declaring that the
State did not have the constitutional authority to impose sales tax on levy transaction was in force, the Revenue again issued a demand notice to the
appellant levying sales tax on the turnover involving levy transaction. The challenge of the above said demand before the High Court was rejected
on the ground of alternative remedy. The appellant carried the matter to the Supreme Court. When the matter was pending before the Supreme
Court, the Revenue again issued a demand notice in the year 1986, which again came to be challenged and the challenge was upheld following the
earlier judgment of the High Court dated 17th May 1975. Against the said judgment of the High Court, State preferred an appeal before the
Supreme Court. Both the cases were heard together and ultimately the Supreme Court upheld the imposition of sales tax on levy transaction by its
judgment dated 6th January 1997. After the judgment of the Supreme Court the Revenue issued another demand notice for the assessment years
1975-76 1982-83, and 1983-84 dated 20th February 1997 and the demand had been duly discharged. However, on 25th April 1997, the
Revenue issued a further notice purported to be u/s 59 of the Haryana General Sales Tax Act, demanding a sum of Rs. 2,26,01,400 towards
interest payable on the belated payment of the tax due in respect of the assessment year 1975-76. The assessee challenged that levy of interest.
The question raised before the Supreme Court was whether the Revenue was justified in demanding interest from the appellant on the tax due by it
for the assessment year 1975-76 on the basis of the demand made during the year 1982.
In that factual situation, the Supreme Court held that during the period between 17th May 1975 to 6th January 1997 the law declared by the
High Court was that the State of Haryana did not have the constitutional authority to impose sales tax on the levy transactions. Such position
continued till 6th January 1997 when the Supreme Court upheld the imposition of tax on levy transaction. The demand made in the year 1982 fell
within the period, when the law did not permit the State of Haryana to impose sales tax on the levy transaction and the demand cannot be said to
be a valid demand and consequently, the interest claimed based on the invalid demand cannot be sustained. The facts of the above case is totally
different from the facts of the present case. The demand notice dated 17.3.1988 in Form B3 cannot at all by any stretch of imagination be
considered to be invalid demand. Further the demand has not been declared as invalid by any competent court . Hence we are of the view that the
said case also would not advance the case of the petitioner herein.
It is now well settled that Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact
situation of the decision on which reliance is placed. Observations of Courts are not to be read as Euclid''s theorems nor as provisions of the
statute. These observations must be read in the context in which they appear. Judgments of courts are not to be construed as statutes. To interpret
words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to
explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes, their words are not to be
interpreted as statutes. (vide Haryana Financial Corporation and Another Vs. Jagdamba Oil Mills and Another, )
There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be
remembered that judicial utterances are made in the setting of the facts of a particular case. Circumstantial flexibility, one additional or different fact
may make a world of difference between conclusions in two cases (vide PADMASUNDARA RAO & OTHERS VS. STATE OF TAMIL
NADU AND OTHERS AIR 2002SCW 1156)
Learned counsel for the petitioner relied on the decision of this Court dated 14.8.2002 made in W.P. Nos. 6777 and 6778 of 2001 to
contend that the levy of interest on additional sales tax cannot be sustained. So far as the present case is concerned nothing of any sort has been
raised before the Special Tribunal nor any factual foundation has been made in the present writ petition also. At page 9 of the additional typed set
of papers only a revised order dated 20.3.1995 for the assessment years 1978- 79 alone has been enclosed, wherein a demand has been made
for additional sales tax also, apart from other component taxes. In the order impugned before the Tribunal which, is made available at page 13A of
the typed set of papers, nothing is made out as to whether any interest has been levied on additional sales tax. In the absence of any particular as to
levy of interest on additional sales tax, we are not in a position to grant any relief in this case, even though the position of law has been clearly laid
down by the Division Bench of this Court in W.P. Nos. 6777 and 6778 of 2001 except to observe that if any interest is levied on the belated
payment of additional tax, it is open to the assessee to agitate the same in accordance with law.
For the reasons stated above, the writ petition is liable to be rejected and the same is accordingly dismissed. Consequently, the connected
W.M.P is also dismissed. However, there is no order as to costs.