Civil Appeal No 852 of 1980
From the Assessment orders dated the 30th January 1980 of the Commercial Tax officer Spl
Circle Kota Rajasthan for the assessment year 1974 75
Soli J Sorabji BR Agarwal and P G Gokhale for the Appellants
section T Desai and B D Sharma for the Respondents
569 The Judgment of AP Sen and E section Venkataramiah JJ
was delivered by Venkataramiah J P N Bhagwati J gave a dissenting opinion
BHAGWATI J I have had the advantage of reading the Judgment prepared by my learned brother Venkataramiah J but despite the great respect which I have for his learning and erudition I find myself unable to agree with the view taken by him
The facts giving arise to this appeal are not very material because the question which arises for consideration is essentially one of law but the factual setting does help to see the question in its proper perspective and hence it would be useful to set out a few material facts
The assessee is a public limited company carrying on business of manufacture and sale of cement
It has a factory for manufacturing cement at Lakheri in the State of Rajasthan and it effects sales of cement both inside as well as outside the State of Rajasthan
Since some of the sales effected by the assessee were inside the State of Rajasthan and some others were inter state sales the assessee filed returns of sales for the quarters comprised in the period 1st August 1973 up to 31st July 1974 both under the Rajasthan Sales Tax Act 1954 thereinafter referred to as the Stale Act and the hereinafter referred to as the Central Act
The assessee did not include in the taxable turn over shown in the returns the amount of freight paid in respect of the goods sold under the bonafide impression that the amount of freight did not form part of the sale price and was not includible in the taxable turn over of the assessee
This impression was carried by the assessee in view of certain decisions which had been given by some High Courts as well as the Supreme Court and particularly the decision of the Supreme Court in Hyderabad Asbestos Cement Products Limited vs State of Andhra Pradesh1
The assessee paid up for each quarter the full amount of tax calculated on the basis of the return submitted by it and the receipt for such payment was filed along with the return
The amount of tax paid by the assessee obviously did not include tax on the amount of freight since according to the assessee the amount of freight did not form part of the sale price and was accordingly not shown in the returns as forming part of the taxable turn over
Subsequently however the question whether the amount of freight formed part of the sale price and was therefore includible in the taxable turn over of the assessee so as to be exigible to tax came up for consideration before 570 this Court in Hindustan Sugar Mills Limited vs State of Rajasthan and others1 and it was held by this Court that by reason of the provisions of the Cement Control order 1967 which governed the transactions of sale of cement entered into by the assessee with the purchasers the amount of freight formed part of the sale price within the meaning of the first part of the definition of that term contained in section 2 p of the State Act and section 2 h of the Central Act and was includible in the taxable turn over of the assessee
As soon as this decision was given by the Court on 29th August 1978 the assessee immediately prepared revised returns in respect of the period 1st August 1973 up to 31st July 1974 showing the amount of freight as forming part of the taxable turn over and filed the same before the Commercial Tax officer Special Circle Kota on 20th October 1978
The assessee also deposited along with the revised returns challans showing payment of the balance of the tax on the basis of the revised returns under the State Act as well as the Central Act
Two orders of assessment were thereafter passed by the Assessing Authority one under section 10 sub section 3 of the State Act and the other under section 9 of the Central Act
The former order of assessment levied a penalty of Rs 53355 under section 7AA of the State Act and interest amounting to Rs 8591050 under section 11B of the State Act for the delay in payment of the tax in respect of the amount of freight under State Act which according to the Assessing Authority ought to have been deposited alongwith the filing of the original returns
Similarly the latter order of assessment also levied a penalty of Rs 134205 under section 7 AA of the State Act read with section 9 sub section 2 of the Central Act and interest amounting to Rs 207174 under section 11B of the State Act read with section 9 sub section 2 of the Central Act for the delay in depositing the tax payable in respect of the amount of freight under the Central Act
The assessee has in the present appeal preferred with special leave challenged the validity of both these orders of assessment in so far as they levy penalty and interest on the assessee
The first question which arises for consideration before us is whether the Assessing Authority was right in imposing penalty on the assessee under the two assessment orders for not depositing the tax in respect of the amount of freight at the time of filing of the original returns under the State Act and the Central Act
My 571 learned brother Venkataramiah has held following the decision of this Court in Cement Marketing Company of India Limited vs Commissioner of Sales Tax Indorel that the levy of penalties for not including the freight charges in the taxable turn over in the original returns and for not paying the tax in respect of such freight charges is unsustainable and that the two orders of assessment in so far as they levy penalty on the assessee are liable to be quashed and set aside
I entirely agree with the view taken by him and I do not think I can usefully add anything to what he has said
The next question that arises for consideration is whether the assessee was liable under section II B of the State Act to pay interest on the tax in respect of the amount of freight for the period between the date of filing of the original return and the date when such tax was actually paid while filing the revised return
The contention of the revenue was that the assessee was so liable and this contention was sought to be supported by relying on section 2 sub sections 1 and 2 read with section 11 of the State Act
The same provisions with section 9 sub section 2 of the Central Act were also relied upon for the purpose of sustaining the Revenue s claim for interest under the Central Act
The determination of the question before us therefore really turns on the true interpretation of section 7 subsection 1 and 2 read with section II B of the State Act
Section 7 of the State Act as it stood at the material time was in the following terms 7
Submission of returns 1 Every registered dealer and such other dealer as may be required to do so by the assessing authority by notice served in the prescribed manner shall furnish prescribed returns for the prescribed periods in the prescribed forms in the prescribed manner and within the prescribed time to the assessing authority Provided that the assessing authority may extend the date for the submission of such returns by any dealer or class of dealers by a period not exceeding fifteen days in the aggregate
2 Every such return shall is be accompanied by a Treasury receipt or receipt of any bank authorised to receive money on behalf of the State Government showing the 572 deposit of the full amount of tax due on the basis of return in the State Government Treasury of bank concerned
2A Notwithstanding anything contained in sub section 2
the State Government may by notification in the official Gazette require any dealer or class of dealers specified therein to pay tax It intervals shorter than those prescribed under sub secion 1
In such cases the proportionate tax on the basis of the last return shall be deposited at the intervals specified in the said notification in advance of the return
The difference if any of the tax payable according to the return and the advance tax paid shall be deposited with the return and the return shall be accompanied by the treasury receipt or receipts of any Bank authorised to receive money on behalf of the State Government for the full amount of tax due shown in the return
3 If any dealer discovers any omission error or r wrong statement in any returns furnished by him under sub section 1 he may furnish a revised return in the prescribed manner before the time prescribed for the sub mission of the next return but not later
Section II B of the State Act during the relevant period provided inter alia as under 11B Interest on failure to pay tax fee or penalty a If the amount of any tax payable under sub sections 2 and 2A of section 7 is not paid within the period allowed or b If the amount specified in any notice of demand whether for tax fee or penalty is not paid within the period specified in such notice or in the absence of such specification within 30 days from the date of service of such notice the dealer shall be liable to pay simple interest on such amount at one per cent per month from the day commencing after the end of the said period for a period of three months and at one and a half per cent per month thereafter during the time he continues to make default in the payments 573 Provided that where as a result of any order under this Act the amount on which interest was pay able under this section has been reduced the interest shall be reduced accordingly and the excess interest paid if any shall be refunded Provided further that no interest shall be payable under this section on such amount and for such period in respect of which interest is paid under the provisions of sections 11 and 14
These are the two sections which fall for construction but in order to arrive at their true meaning and legal effect it is necessary to refer to a few other provisions of the State Act
Section 3 is the charging section and it creates the liability to pay tax
That is the normal function of a charging section in a taxing statute
But of itself it does not make the tax payable by an assessee
It is only when the tax which an assessee is liable to pay is ascertained that becomes payable by the assessee
Now the normal mode by which the tax payable by an assessee is ascertained is by the process of assessment which is provided in section 10 Sub section I clause a of section 10 says that assessment and determination of tax due for any year shall be made after the returns for all the periods of that year have become due
Section 11 then provides for payment and recovery of tax and its provisions in so far as material read inter alia as follows 11
Payment and recovery of tax I The tax shall be payable by a dealer on the basis of the assessments
F 2 The tax paid by a dealer shall be adjusted against the judgment determined as a result of the assessment under section 10 and the balance of the amount shall be payable by such dealer by such date as may be specified in the notice of demand and where no such date is specified shall be paid within thirty days from the date of service of the notice
Provided that the assessing authority may subject to such conditions and restrictions as may be prescribed in respect of any particular dealer and for reasons to be re corded in writing extend the date of such payment and 574 allow such dealer to pay the tax due and the penalty if any by instalments
3 In default of the payment of tax payable under sub section 1 or sub section 2 the amount of tax shall be recoverable as an arrear of land revenue
       
Provided further that where recovery of tax or any part thereof is stayed under the preceding proviso the amount of such tax shall be recoverable with interest at the prescribed rate on the amount ultimately found due and such interest shall be payable on such amount from the date of tax first become due   When the assessment is made and the tax payable by an assessee is determined the tax so determined does not become payable until after a notice of demand is served by the Assessing Authority under section 11 sub section 2 read with Rule 31 of the Rajasthan Sales Tax Rules 1955 made by the Government of Rajasthan in exercise of the powers conferred under section 26 of the State Act and then the assessee is allowed time to make payment up to the date specified in the notice of demand and if no such date is specified then within thirty days from the date of service of the notice
So long the assessee pays up the amount of the tax assessed within the time specified in the notice of demand or within thirty days from the date of service of the notice as the case may be he would not be in default and hence section 11 B clause b provides that the assessee would be liable to pay interest on the tax assessed only if 
the amount of such tax is not paid within the period specified in the notice of demand or in the absence of such specification within thirty days from the date of service of such notice and then too the liability to pay interest would commence not from the date of assessment but from the day commencing after the end of the said period that is the period specified in the notice of demand or thirty days from the date of service of such notice as the case may be
Thus even after the assessment is made and the tax payable by an assessee is determined the assessee is not liable to pay interest on the amount of such tax until after the period specified in the notice of demand or in the absence such specification thirty days from the date of service of such notice have expired
575 Turning now to sub section I of section 7 it requires every A registered dealer to furnish prescribed returns for the prescribed period in the prescribed forms in the prescribed manner and within the prescribed time to the Assessing Authority
It was not disputed on behalf of the Revenue that in the present case the prescribed returns in the prescribed forms were furnished by the assessee in time for the quarter comprised in the period 1st August 1973 to 31st July 1974 the only grievance in regard to those returns being that the amount of freight was not shown as forming part of the taxable turnover
Sub section 2 of section 7 provides that every return furnished by the assessee must be accompanied by a receipt showing the deposit of the full amount of tax due on the basis of the return and the assessee accordingly deposited the full amount of tax calculated on the basis of each quarterly return and filed the receipt showing such deposit along with the return
Since according to the view taken by the assessee at the time of filing the original returns the amount of freight did not form part of the sale price it was not included in the taxable turnover shown in the original returns and hence no tax on the amount of freight was deposited by the assessee while filing the original returns
It was only after the decision of this Court in Hindustan Sugar Mills Limited Company s case supra that the assessee filed revised returns including the amount of freight in the taxable turnover and deposited the balance of the tax on the basis of the revised returns
The argument of the Revenue was and that is the argument which has appealed to my learned brother Venkataramiah that the words full amount of tax due on the basis of return in sub section 2 of section 7 meant the full amount of tax due on the basis of a true and proper return which ought to have been filed by the assessee and not the full amount of tax due on the basis of the return actually filed and since the amount of the freight was liable to be included in the taxable turnover and hence in a true and proper return the full amount of tax due on the basis of return within the meaning of sub section 2 of section 7 included the tax on the amount of freight and the assessee therefore ought to have deposited the same at the time of filing the original returns and since the assessee failed to do so section 11 A clause a was attracted and the assessee was liable under that provision to pay interest on the tax on the amount of freight which remained unpaid until the filing of the revised returns
This argument plausible though it may seem is in my opinion unsustainable
It is plainly contrary to the language of sub section 2 of section 7 read with section 11B and is opposed to the scheme of the State Act
It is also incon 576 sistent with the decision of a Bench of five Judges of this Court in State of Rajasthan vs Ghasi Lal1
Indeed I fail to see how in the face of the decision the Court can possibly accept the argument of the Revenue
The language used in sub section 2 of section 7 is full amount of tax due on the basis of return
The return referred to is obviously the return filed by the assessee under sub section 1 of section 7
Now it is true that when sub section 1 of section 7 requires an assessee to file a return the return filed must be correct and proper
If the return is not correct and proper the Assessing Authority may not give credence to the return and may refuse to assess the tax on basis of the return and if the Assessing Authority finds that the assessee has concealed any particulars from the return furnished by him or has deliberately furnished inadequate particulars in the return the Assessing Authority may levy penalty on the assesssee under section 16 sub section 1 clause e and the assessee may also be liable to be punished for an offence under section 16 sub section 3 clause d for making a false statement in the return
But whether the return filed be correct or not the tax payable by the assessee under sub section 2 of section 7 would be the full amount of tax due on the basis of the return
We must look at the return actually filed by the assessee in order to see what is the full amount of tax due on the basis of such return
It is not the assessed tax nor is it the tax due on the basis of a return which ought to have been filed by the assessee but it is the tax due according to the return actually filed that is payable under sub section 2 of section 7
This provision is really in the nature of self assessment and what it requires is that whatever be the amount of tax due on the basis of self assessment must be paid up along with the filing of the return which constitutes self assessment
I fail to see how the plain words of sub section 2 of section 7 can be tortured to mean full amount of tax due on the basis of return which ought to have been filed but which has not been filed
It may also be noted that the construction contended for on behalf of the Revenue leads to a serious anomaly
If this construction were accepted the tax payable under sub section 2 of section 7 would be the full amount of tax due on the basis of a correct and proper return and that would necessarily be the same as the tax assessed by the Assessing Authority because what is a correct and 577 proper return would be determinable only with reference to the A assessment ultimately made
The assessment when made would show whether the return filed was correct and 
proper it would be correct and proper if it accords with the assessment made if it does not accord with the assessment then to the extent to which it differs it would obviously have to be regarded as incorrect and improper
The consequence of the construction suggested on behalf of the Revenue would be thus that the tax payable under sub section 2 of section 7 would be the full amount of the tax as assessed because that would represent the tax due on the basis of a correct and proper return and the assessee would have t deposit at the time of filing the return an amount equivalent to the amount of the tax as assessed
If the assessee fails to do so then apart from the liability to pay interest under section I IB clause a the assessee would expose himself to penalty under section 16 sub section 1 clause n which provides inter alia that any person who fails to comply with any requirement of the provisions of the State Act the requirement under sub section 2 of section 7 being to deposit the full amount of tax due on the basis of return shall be liable to D penalty in a sum not exceeding Rs 1000 and in the case of continuing default a further penalty not exceeding Rs 50 for every day of such continuance
 This is a consequence which it is difficult to believe could ever have been contemplated by the legislature
The legislature could never have intended that the assessee should be liable on pain of imposition of penalty to deposit an amount which is yet to be ascertained through assessment
How would the assessee know in advance what view the Assessing Authority would take in regard to the taxability of any particular category of sales or the rate of tax applicable to them and deposit the amount of tax on that basis  And this would be all the more problematic in the case of a statute like the sales tax law which is full of complexities and where it may be difficult to assert dogmatically that a particular view is right or wrong
Even in regard to the liability to pay interest it does not stand to reason that the legislature should have subjected the assessee to such liability for non payment of an amount of which the liability for payment is still to be ascertained
Moreover on the construction of the Revenue if the assessee has not deposited at the time of filing the return an amount equivalent to the full amount of the tax assessed the assessee would be liable to pay interest on amount remaining unpaid from the date of filing of the return until payment
But as I have already pointed out above when the assessment is made and the tax payable by the 578 assessee is determined the assessee is given time for payment of the amount of the tax assessed upto the period specified in the notice of demand and in the absence of such specification within thirty days from the date of service of such notice and it is only if the assessee fails to make payment within such period that he becomes liable to pay interest on the amount of the tax assessed to the extent to which it remains unpaid
There is no liability on the assessee to pay interest on the amount of the tax assessed until after the expiration of the period specified in the notice of demand or thirty days from the date of service of such notice as the case may be
There would thus be a conflict between the two provisions if the construction contended for on behalf of the Revenue were accepted
Under sub section 2 of section 7 read with section 11 B clause a the assessee would be liable to pay interest on the amount of the tax assessed to the extent to which it has not been deposited at the time of filing the return and such interest would run continuously from the date of the filing of the return until payment while under section 11 B clause b the assessee would not be liable to pay interest on the amount of the tax assessed during the period specified in the notice of demand or in the absence of such non specification during the period of thirty days from the date of service of such notice
Such a conflict could never have been intended by the legislature
It is a well settled rule of interpretation that a statute must be so construed as not to create any repugnance between the different provisions for it is a basic assumption underlying every interpretational exercise that the legislature must be supposed not to have intended to contradict itself
The Court must always prefer that interpretation which avoids repugnancy between two provisions of a statute and gives full meaning and effect to both
Therefore on this principle of interpretation also the construction canvassed on behalf of the Revenue cannot be accepted as it would create a direct conflict between the provisions of clause a and b of section 11 B
The only way in which clauses a and b of section 11 B can be read harmoniously and full meaning and effect can be given to them is by construing them as dealing with distinct matters or situations
The tax payable under sub section 2 of section 7 dealt with in clause a of section 11 B cannot therefore be equated with the amount of the tax assessed forming the subject matter of clause be of section l l and hence it must be held to be tax due on the basis of the return actually filed by the assessee and not on the basis of a correct and proper return which ought to have been filed by him
579 There is also another angle from which the problem can be A considered
Clause a of section 11 B postulates tax which though payable under sub section 2 of section 7 is not paid by the assessee within the time allowed and hence it subjects the assessee to liability to interest for non payment of such tax
Now if as contended by the Revenue the tax payable under sub section 2 of section 7 means the full amount of tax due on the basis of a correct and proper return which ought to have been filed by the assessee and is therefore equivalent to the amount of the tax as assessed it would be the amount of the tax as assessed which would be payable under sub section 2 of section 7 and this amount would be payable by the assessee at the time of filing the return even though ex hypothesi no assessment has taken place
Now it is difficult to appreciate how under the scheme of taxation embodied in the State Act the amount of tax which is yet to be ascertained through the process of assessment can be said to be payable by the assessee at the time of filing the return
If as contended by the Revenue it is so payable it is difficult to understand why it should have been liable to bear interest from the date of filing the return upto the date of assessment and thereafter it should have been freed from the liability of bearing interest upto the period specified in the notice of demand or thirty days from the date of service of the notice as the case may be and the rate of interest also should have been made to vary from period to period
Moreover it is to my mind impossible to accept the proposition that the amount of the tax ultimately assessed which would represent the tax due on the basis of a correct and proper return should be payable by the assessee at the time of filing the return under sub section 2 of section 7
The scheme of taxation envisaged in the State Act clearly shows that it is only when the assessment is made and the period specified in the notice of demand or in the absence of such specification thirty days from the date of service of such notice expires that The amount of tax as assessed becomes payable by the assessee and its payment can be enforced by the Revenue
What becomes payable by the assessee under sub section 2 of section 7 is merely the tax due on the basis of the return actually filed by the assessee that is on the basis of self assessment
G This position seems to be clear beyond doubt on an examination of the scheme of taxation contained in the State Act and no authority is needed in support of it but if any authority were needed it is to be found in the decision of a Bench of five Judges of this Court in State of Rajasthan vs Ghasi Lal supra
There the 580 question was whether the assessee could be said to have failed without reasonable cause to pay the tax due within the time allowed when he paid the tax due on the basis of the quarterly returns at the time of filing those returns but the returns were filed long after the due dates for filing the same had expired
The argument of the Revenue was that tax became due from the assessee under section 3 which is the charging section and the assessee could not withhold payment of the same by delaying the filing of the quarterly returns within the time prescribed under the State Act and he was therefore liable to pay interest on the amount of the tax as assessed from the date the quarterly returns ought to have been filed and the amount of the tax paid
This argument of the Revenue was rejected by the Court and Sikri J speaking on behalf of the Bench of five Judges said Till the tax payable is ascertained by the Assessing Authority under section 10 or by the assessee under section 72 no tax can be said to be due within section 161 b of the Act for till then there is only a liability to be assessed to tax These observations show beyond doubt that on a true construction of the provisions of the State Act tax becomes due from the assessee and is payable by him only when it is ascertained by the Assessing Authority under section 10 or by the assessee under section 72
Until then there is only the liability of the assessee to be assessed to tax and no tax can be said to be payable by the assessee
The tax payable is ascertained when the assessment is made by the Assessing Authority under section 10 or when the assessee himself quantifies it through the process of self assessment under sub section 2 of section 7
These two amounts of tax may and in quite a number of cases would be different because one is ascertained by the assessee himself by filing his return and the other is ascertained by the Assessing Authority through the process of assessment and that is why sub section 4 of section 7 provides that every deposit of tax made under sub section 2 shall be deemed to be provisional subject to necessary adjustments in pursuance of final assessment of tax made under section 10
This provision clearly contemplates that the tax payable under sub section 2 of section 7 may be different from the tax assessed under section 10 and it cannot therefore obviously be the tax due on the basis of correct and proper return because that would necessarily be the same as the tax ultimately assessed under section 10 but must be the tax due on the basis of the return actually filed
Mr Justice Venkataramiah has in his Judgment classified registered dealers into the following five different categories 581 1
A registered dealer who files his return showing a higher taxable turnover than the actual turnover which is ultimately found to be taxable at the time of regular assessment and who pays tax under section 72 of the Act on the basis of the return
A registered dealer who files a true and proper return and pays tax on the basis of such return within the time allowed
A registered dealer who does not file any return at all as required by section 71 and pays no tax under section 72 of the Act
A registered dealer who files a true return but does not pay the full amount of tax as required by section 72 and 5
A registered dealer who files a return but wrongly claims either the whole or any part of the turnover as not taxable and pays under section 72 of the Act that amount of tax which according to him is payable on the basis of the return
The learned Judge has observed that if the construction contended for on behalf of the assessee were accepted registered dealers falling within categories 3 4 and S would be outside the provision enacted in sub section 2 of section 7 read with section 11B clause a and no interest would be payable by them under that provision and that would make clause a of section I I either unworkable or meaningless
I must with the greatest respect confess my inability to appropriate the line of reasoning which has prevailed with the learned Judge in making this observation
The learned Judge has proceeded on the basis that the registered dealers falling within all the three categories namely 3 4 and S are required by sub section 2 of section 7 to pay the tax chargeable under section 3 of the State Act and if they do not pay the same within the time allowed that is at the time when the returns are filed or in case the returns are not filed within the prescribed time then before the expiration of the date when they ought to have been filed they would be liable to pay interest under section 11B clause a
There is in my opinion a basic fallacy underlying this assumption because it is clear from the language of sub section 2 of section 7 that it 582 is only on the filing of the return that the liability to pay the tax due on the basis of the return arises
If no return is filed within the prescribed time it would undoubtedly constitutes a default attracting penalty under section 16 sub section 1 clause n but there would be no liability on the assessee to pay interest on the amount of the tax because the liability to pay the tax due on the basis of the return   under sub
section 2 of section 7 can arise only when the return is filed
There is no liability on the assessee to pay any amount by way of tax until the return is filed or the assessment is made
This is clear from the decision of this Court in the State of Rajasthan vs Ghasi Lal supra where this Court held in so many terms at page 322 of the Report that since the assessee in that case did not file returns till December 19 1959 and January and March 1960 section 72 could not be attracted till then Emphasis supplied
I fail to understand how in the face of these observations made by a Bench of five judges of this Court it can ever be held that section 7 sub section 2 is attracted even when no return has been filed
It is clear from the observations in this case observations which have been quoted here as also in an earlier paragraph that until the assessee files a return or the assessment is made no tax is payable by the assessee because till then there is only a liability to be assessed to tax 
I must therefore regretfully express my liability to accept the conclusion reached by my learned brother Venkataramiah that a registered dealer falling within category 3 who does not File any return at all as required by sub section I of section 7 would still be liable to pay the amount of tax and if he does not pay the same before the due date for filing the return has expired he would be liable to pay interest under section I IB clause a
That would be plainly contrary to the decision in State of p Rajasthan vs Ghasi Lal supra which being a decision of S Judges of this Court is binding upon us
So also with regard to registered dealers falling within category 4 I cannot agree with the view taken by my learned brother Venkataramiah
He has reasoned that if a registered dealer files a return but does not pay the full amount of the tax due on the basis of the return filed by him the Assessing Authority would be entitled to ignore the return under sub rule 4 of Rule 25 and when the return is not taken cognizance of there would be no return on the basis of which interest can be computed
This reasoning is in my opinion fallacious and if I may say so without meaning the slightest disrespect it is based on misappreciation of the effect of sub rule 4 of Rule 25 vis a vis sub section 2 of section 7
Rule 25 583 sub rule 4 provides that if a return is not accompanied by a receipt for the deposit of tax as required by sub section 2 of section 7 the Assessing Authority shall not be bound to take any cognizance of the return
If the assessee does not deposit the amount of tax due on the basis of the return and files the return without making such deposit the Assessing Authority is given the discretion to ignore the return and to proceed to assess the assessee as if no return were filed
But the Assessing Authority may in a given case if it so thinks fit take cognizance of the return for the purpose of assessment despite the fact That the tax due on the basis of the return has not been deposited by the assessee as required by sub section 2 of section 7
Where the Assessing Authority chooses to take cognizance of the return there can be no doubt even on the reasoning of Mr Justice Venkataramiah that the assessee would be liable to pay the amount of tax due on the basis of the return and if he fails to do so he would have to pay interest under section 11 clause a
Then merely because the Assessing Authority may in a given case in the exercise of its discretion decline to take cognizance of the return it does not mean that in such a case the assessee would be retrospectively relieved of his liability to pay the amount of tax due on the basis of the return on the ground that the return filed by him has become no return 
The liability of the assessee to deposit the amount of tax due on the basis of the return cannot depend upon a future discretionary event
namely whether the Assessing Authority chooses to take cognizance of the return or declines to take cognizance of it
The only correct way of reading sub section 2 of section 7 and sub Rule 4 of Rule 25 is that whenever a return is led by the assessee it must under sub section 2 of section 7 be accompanied by receipt showing deposit of the full amount of tax due on the basis of the return and if the assessee fails to deposit the amount of the tax due on the basis of the return actually filed the Assessing Authority would have the option under sub rule 4 of Rule 25 either to take or not to take cognizance of the return
If the Assessing Authority chooses not to take cognizance of the return it would proceed to assess the assessee as if no return had been filed by him but that would not relieve the assessee of the obligation attaching to him under sub section 2 of section 7 of depositing at the time of filing the return the amount of the tax due on the basis of the return actually filed nor would it condone the breach of such obligation
If the assessee does not pay the full amount of the tax due on the basis of the return as required subsection 2 of section 7 he would be liable to pay interest under 584 section 11B clause a irrespective of whether the Assessing Authority chooses to act upon the return or declines to take cognizance of it
The argument which has appealed to my learned brother Venkataramiah that if the construction put forward on behalf of the assessee were accepted sub section 2 of section 7 would fail in its application to a registered dealer falling within category 4 is therefore in my opinion not a valid argument and with the greatest respect I must confess my inability to accept it
On the construction contended for on behalf of the assessee the case of a registered dealer falling within category 4 is clearly covered by sub section 2 of section 7 and in fact it is precisely to cover inter alia a case of this kind that the legislature enacted sub section 2 of section 7 read with section 11B clause a
Similarly the case of a registered dealer falling within category 5 is also covered by sub section 2 of section 7 and if he does not pay the amount of tax which according to him is payable on the basis of the return filed by him he would be liable to pay interest under section 11B clause a
So long as the assessee pays the amount of tax which according to him is due on the basis of the return filed by him there would be no default on his part in complying with the obligation under sub section 2 of section 7 and there would be no liability on him to pay interest under section 11B clause a because he would have paid the amount of tax quantified by him through the process of self assessment The actual amount of tax payable by the assessee would be determined only when it is assessed by the Assessing Authority under section 10 and that would not be payable until the expiration of the period specified in the notice of demand or thirty days from the date of service of such notice as the case may be
I must therefore regret my inability to accept the view taken by my learned brother Venkataramiah that if the construction contended for on behalf of the assessee were accepted section 11 clause a would become meaningless or unworkable
That provision would have full meaning and effect on the construction canvassed on behalf of the assessee and in fact as pointed out above if the construction which has appealed to my learned brother Venkataramiah were accepted the consequence would be directly contradictory to the decision of this Court in State of Rajasthan vs Ghasi Lal supra
My learned brother Venkataramiah has relied strongly on the decision of this Court in Gurshai Saigal vs Commissioner of Income Tax Punjabl but I fail to see how this decision can 585 be of any help in the present case where section 11B clause a is not at all rendered meaningless or unworkable on the construction suggested on behalf of the assessee
The assessee in that case was sought to be charged with interest under sub section 8 of section 18A of the Indian Income Tax Act 1922 which provided that where on making the regular assessment the Income tax Officer finds that no payment of tax has been made in accordance with the foregoing provisions of this section interest calculated in the manner laid in sub section 6 shall be added to The tax as determined on the basis of the regular assessment
 The argument of the assessee was that since sub section 6 of section 18A provided that where in any year an assessee has paid tax under sub section 2 or sub section 3 on the basis of his own estimate and the tax so paid is less than 80 of the tax determined on the basis of the regular assessment simple interest at the rate of 6 per annum from the first day of January in the financial year in which the tax WAS paid upto the date of such regular assessment shall be payable by the assessee and since no payment of tax had been made by the asses n e r at all in that case it was not possible to calculate interest in tile manner laid down in sub section 6 and no interest could therefore be charged to the assessee under sub section 8 of section 18A
This argument was rejected by the Court on the ground that if the words from the first day of January in the financial year in which the tax was paid occurring in sub section 6 of section 18A were to be literally applied in a case falling within sub section 8 of section 18A where no tax would have been paid sub section 8 would be rendered totally meaningless and futile
The Court therefore with a view not to rendering sub section 8 of section 18A a dead letter construed the words in sub section 6 to mean from the first day o January in the financial year in which the tax ought to have been paid
 This liberty was taken by the Court with the language of sub section 6 of section 18A because the Court proceeded on the hypothesis that the legislature could not have intended that sub section 8 of section 18A should be meaningless and unworkable
But here in the present case there is no compelling necessity to modify the words used in sub section 2 of section 7 because sub section 2 of section 7 read with section 11B clause a is not rendered meaningless or futile on a plain natural construction of the language used in that provision
It is interesting to compare section 140A sub section I of the Income Tax Act 1961 with section 7 sub section 2 of the State Act
Sub section I of section 140A provides that where any tax is 586 payable on the basis of any return required to be furnished under section 139 or under sec
148 after taking into account the amount of tax if any already paid under any provision of the Act the assessee shall be liable to pay such tax before furnishing the return and the return shall be accompanied by proof of payment of such tax
Sub section 3 of section 140A then proceeds to state that if any assessee fails to pay the tax or any part thereof in accordance with the provision of sub section 1 the Income Tax officer may direct that a sum equal to two percent of such tax or part thereof as the case may be shall be recovered from him by way of penalty for every month during which the default continues
Can it possibly be contended that these two sub sections of section 140A refer to tax payable on the basis of a proper and correct return or in other words the tax assessed  It is obvious that these two sub sections refer only to tax payable on the basis of self assessment and require such tax to be paid before the filing of the return and if that is not done the assessee becomes liable to pay penalty for every month n during which the default continues
So also section 21 j of Income tax Act 1961 which provides for payment of interest on under payment of advance tax does not impose liability for payment of interest in case or every deficiency but provides for payment of interest only if the advance tax paid is less than 75 per cent of the assessed tax
In the world of human affairs it is hardly possible that the advance tax paid by the assessee or the tax payable on the basis of self assessment would always be equivalent to the tax ultimately assessed by the authorities
There is no reason to interpret section 7 sub section 2 differently from similar provisions in the Income Tax Act 1961
I am therefore of the view that since the assessee deposited the amounts of tax which according to him were due on the basis of the returns actually filed by him and the returns were accompanied by receipts showing deposit of such amounts of tax there was no default on the part of the assessee in paying the amounts of tax payable under sub section 2 of section 7 within the actual period allowed and in the circumstances no interest was payable by the assessee under section I IB clause a
I would accordingly allow the appeal and set aside the orders passed by the Assessing Authority imposing penalty and levying interest on the assessee under the Slate Act as well as the Central Act
The Revenue will pay the costs of the appeal to the assessee
587 VENKATARAMIAH J
The assessee Ms Associated Cement Companies Limited has filed this appeal by special leave under Article 136 of the Constitution against the orders dated January 30 1980 passed by the Commercial Tax officer Special Circle Kota in the State of Rajasthan imposing on it a penalty of Rs 53335 under section 7AA of the Rajasthan Sales Tax Act 1954 hereinafter referred to as the Act  and levying interest under section 11B of the Act amounting to Rs 8591050 and a further penalty of Rs 134205 under section 7AA of the Act read with section 92 of the Central Tax Act and levying interest of Rs 207174 under section 11B of the Act read with section 92 of the in respect of the assessment year 1974 75
The circumstances under which the above orders came to be passed are these The assessee has a cement manufacturing factory in the State of Rajasthan at Lakheri
The cement manufactured at that factory is sold partly in the State of Rajasthan and partly outside that State
The invoices of sales are however made and issued at Ahmedabad and other places
The sales tax returns relating to the sales were filed under the Act and under the at Kota before the assessing authority for the period between August 1 1973 and July 31 1974 i e the assessment year 1974 75
In those returns the assessee had not included in the taxable turnovers the freight charges paid in respect of the goods in question in the bonafide belief that the freight charges were not liable to be included in the taxable turnover in view of certain decisions which had been rendered by some of the High Courts and of the Supreme Court and in particular the decision of this Court in Hyderabad Asbestos Cement Products Ltd vs State of Andhra Pradeshl But in Hindustan Sugar Mills etc
vs State of Rajasthan  Ors2 this Court held that on a true construction of the scheme of the Cement Control order 1967 and the relevant provisions of the Act and of the  the freight charges formed part of the sale price and that sales tax was payable thereon
The above decision was rendered on August 22 1978
On coming to know of the said decision the assessee prepared and filed the revised returns in respect of the assessment year in question ie 1974 75 before the Commercial Tax officer Special Circle Kota on October 20 1978 including the freight charges in the taxable turnover
The assessee also deposited alongwith the revised returns 588 the balance of the sales tax payable under the Act and under the 
Thereafter the assessing authority passed the two impugned orders of assessment one under section 103 of the Act and another under section 9 of the 
In the order of assessment passed under the Act the assessing authority levied a penalty of Rs 53335 under section 7AA of the Act on account of the delay in depositing a sum of Rs 106671 towards sales tax payable in respect of the freight charges and also levied interest of Rs 859l050 under section I IB of the Act
Similarly in the assessment order passed under the  a penalty of Rs 134205 was levied under section 7AA of the Act read with section 92 of the for the delay in depositing the tax payable in respect of the freight charges and levied interest of Rs 207174 under section 11B of the Act read with section 92 of the 
In this appeal we are only concerned with the correctness of the impugned orders in so far as they levy penalty and interest
The first question canvassed before us relates to the levy of penalties on the assessee under the assessment orders for not paying the sales tax payable under the Act and under the in respect of the freight charges which were declared as components of sale price by this Court in Hindustan Sugar Mill s case Supra on August 22 1978
The explanation of the assessee for not including the freight charges in the taxable turnover was as mentioned earlier that there was a doubt about its liability to pay sales tax thereon as the very same question was pending adjudication before this Court and that on the facts and in the circumstances of the case the assessee could not be held guilty of filing false returns before the assessing authority
It was pleaded that since the non inclusion of the freight charges in the taxable turnover was a result of bonafide belief of the assessee that they were not liable to be included in the taxable turnover the assessing authority should have in its discretion not imposed the penalties particularly having regard to the fact that within two months after the judgment of this Court in Hindustan Sugar Mills  case supra the assessee had filed the revised returns including the freight charges in the taxable turnover and paid the sales tax payable in respect of them even before the assessing authority had passed the orders of assessment
We are of the view that This part of the case of the assessee has got to be accepted in view of the decision of this Court in Cement Marketing Co
Of India Ltd vs Asstt
Commissioner of Sales Tax 589 Indore  Ors1 where under similar circumstances this Court held A that the assessee therein which was also manufacturer and dealer in cement was not liable to pay a penalty under section 43 of the Madhya Pradesh General Sales Tax Act 1958 read with section 92 of the 
For the reasons mentioned therein we hold that the levy of penalties for not including the freight charges in the taxable turnover in the original returns and for not paying the tax in respect of such freight charges is unsustainable and that the impugned penalties are liable to be quashed
The next question which arises for consideration relates to the liability of the assessee to pay interest under section 11B of the Act on the tax paid in respect of the freight charges for the period S between the date on which it was payable under section 72 of the Act and the date of payment and the liability to pay interest on the tax payable in respect of the freight charges under the in accordance with section 92 thereof read with section 11B of the Act
The claim of the department is based on subsections 1 and 2 of section 7 read with section 11B of the Act in the case of interest claimed under the Act and on the aforesaid provisions of the Act read with section 92 of the in respect of the interest payable under the Sales Tax Act
Section 7 of the Act at the relevant point of time read as follows 7
Submission of returns 1 Every registered dealer and such other dealer as may be required to do so by the assessing authority by notice served in the prescribed manner shall furnish prescribed returns for the prescribed periods in the prescribed forms in the prescribed manner and within the prescribed time to the assessing authority Provided that the assessing authority may extend the date for the submission of such returns by any dealer or class of dealers by a period not exceeding fifteen days in the aggregate
2 Every such return shall be accompanied by a Treasury receipt or receipt of any bank authorised to receive money on behalf of the State Government showing the deposit of the full amount of tax due on the basis of return in the State Government Treasury or bank concerned
590 2A Notwithstanding anything contained in sub section 2 the State Government may by notification in the official Gazette require any dealer or class of dealers specified therein to pay tax at intervals shorter than those prescribed under sub section 1
In such cases the proportionate tax on the basis of the last return shall be deposited at the intervals specified in the said notification in advance of the return
The difference if any of the tax payable according to the return and the advance tax paid shall be deposited with the return and the return shall be accompanied by the treasury receipt or receipts of any Bank authorised to receive money on behalf of the State Government for the full amount of tax due shown in the return 3 If any dealer discovers any omission error or wrong statement in any returns furnished by him under sub section 1 he may furnish a revised return in the prescribed manner before the time prescribed for the submission of the next return but not later
4 Every deposit of tax made under sub section 2 shall be deemed to be provisional subject to necessary adjustments in pursuance of the final assessment of tax made for any year under section 10 Section 11B of the Act during the relevant period read as under 11 B Interest on failure to pay tax fee or penalty a If the amount of any tax payable under subsections 2 and 2A of section 7 is not paid within the period allowed or b if the amount specified in any notice of demand whether for tax fee or penalty is not paid within the period specified in such notice or in the absence of such specification within 30 days from the date of service of such notice the dealer shall be liable to pay simple interest on such amount at one percent per month from the day commencing after the end of the said period for a period of three months and at one and a half percent per month 591 thereafter during the time he continues to make default in the payments Provided that where as a result of any order under this Act the amount on which interest was payable under this section has been reduced the interest shall be reduced accordingly and the excess interest paid if any shall be refunded Provided further that no interest shall be payable under this section on such amount and for such period in respect of which interest is paid under the provisions of sections 11 and 14
 We are principally concerned in this case with sub sections 1 and 2 of section 7 of the Act
Sub section 1 of section 7 of the Act requires every registered dealer and such other dealer as may be required to do so by the assessing authority in the prescribed manner to furnish returns in a prescribed form in respect of the n prescribed periods within the prescribed time furnishing necessary particulars regarding his turnover
The proviso to sub section 1 of section 7 of the Act authorises the assessing authority to extend the date for the submission of such returns by a period not exceeding 15 days in the aggregate
Sub section 2 of section 7 of the Act insists that every such return shall be accompanied by a 1 Treasury receipt or receipt of any bank authorised to receive money on behalf the State Government showing the deposit of the full amount of tax due on the basis of return in the State Government Treasury or bank concerned
Sub section 4 of section 7 of the Act it may be noticed provides that every deposit of tax made under sub section 2 shall be deemed to be provisional subject to necessary adjustments in pursuance of the final assessment of tax made for any year under section 10
Clause a of section 11B of the Act authorises the levy of interest on the amount of tax not paid in accordance with sub sections 2 and 2A of section 7 of the Act
The expression prescribed  is defined in section 21 of the Act
It states that in the Act unless the context otherwise requires prescribed means prescribed by rules made under the Act
Section 26 of the Act empowers the State Government to make rules to carry out the purposes of the Act and in particular and without prejudice to the generality of the foregoing power such rules may provide for all matters expressly required or allowed by the Act to be prescribed
We have seen earlier that section 71 592 of the Act requires the returns to be filed in the prescribed manner in respect of the prescribed periods and within the prescribed time
Sub section 5 of section 26 of the Act lays down that all rules made under that section shall be published in the official Gazette and upon such publication shall have effect as if enacted in the Act Chapter VII of the Rajasthan Sales Tax Rules 1955 hereinafter referred to as the Rules  framed by the State Government in exercise of its power under the Act deals with the topic Return of turnover and other returns and statements
The relevant part of Rule 25 of the Rules which appears in Chapter VII reads as follows 25
Return of turnover 1 The return referred to in sub section 1 of section 7 shall be in form ST 5 and shall be signed by the dealer himself or his agent and shall be verified in the manner indicated therein and shall be submitted to the assessing authority concerned
2 The return may be presented personally or may be sent by post
3 The said return shall be filed for such of the quarters ending with the last day of the month of June September December and March of every assessment year if the previous year  of the dealer ends on the 31st day of March of any year and in other cases for each of the quarters of the year of accounts of the dealer and shall be filed not later than 30 days after the end of the quarter to which it relates Explanation
The quarters of the year of accounts of a dealer shall be as follows First quarter The period of three months commencing on the first day of the year of accounts
Second quarter The period of three months commencing on the day next after the end of the first quarter
Third quarter The period of three months commencing on the day next after the end of the second quarter
Fourth quarter Rest of the year of account
The months shall be calculated according to the usage of the dealer whose year of account is in question
593 4 If a return is not accompanied by a receipt for the deposit of tax as required by sub section 2 of section 7 the assessing authority shall not be bound to take any cognisance of the return
 Sub rule 1 of Rule 25 of the Rules provides that the return referred to in sub section 1 of section 7 of the Act shall be in form ST 5 and sub rule 3 of Rule 25 prescribed the time within which quarterly returns should be filed by a dealer
Sub rule 4 of Rule 25 of the Rules provides that if a return is not accompanied by a receipt for the deposit of tax as required by sub section 2 of section 7 of the Act assessing authority shall not be bound to take any cognisance of the return
Rule 25 of the Rules which is framed under the Act should be read as a part of the Act itself in view of the express provision contained in sub section 5 of section 26 of the Act which declares that all rules made under section 26 shall on publication in the official Gazette have effect as if enacted in the Act
That should be the effect of a rule framed under statute containing a provision similar to the provision in section 265 of the Act can be gathered from a decision of the House of Lords in Institute of Patent Agents  Ors
vs Joseph Lockwood in which Lord Herschell LC Observed at page 360 thus I own I feel very great difficulty in giving to this provision that they shall be of the same effect as if they were contained in this Act any other meaning than this that you shall for all purposes of construction or obligation or otherwise treat them exactly as if they were in the Act
No doubt there might be some conflict between a rule and a provision of the Act
Well there is a conflict sometimes between two sections to be found in the same Act
You have to try and reconcile them as best you may
If you cannot you have to determine which is the leading provision and which the subordinate provision and which must give way to the other
That would be so with regard to the enactment and with regard to rules which are to be treated as if within the enactment
 The contention of the assessee in the present case is that as it had deposited the full amount of tax due on the basis of the returns filed under sub section 1 of section 7 of the Act at the time when 594 they were filed it had compiled with sub section 2 of section 7 of the Act and that the question of levying interest on the amount of tax which it deposited on the basis of the revised returns for the period prior to the date of the revised returns did not arise
On behalf of the department it is urged before us that the words on the basis of return occurring in sub section 2 of section 7 of the Act must be read as on the basis of a true and proper return in the context in which those words appear in the statute and if they are so read the assessee is liable to pay interest on the deficit amount of tax which was made good on October 20 1978 for the period between the date on which such deposit or deposits had to be made under section 71 of the Act read with Rule 25 of the Rules and the date on which they were actually made
We are concerned in this case with the liability of the assessee to pay interest on the amount of tax which had remained unpaid Tax interest and penalty are three different concepts
Tax becomes payable by an assessee by virtue of the charging provision in a taxing statute
Penalty ordinarily becomes payable when it is found that an assessee has willfully violated any of the provisions of the taxing statute
Interest is ordinarily claimed from an assessee who has withheld payment of any tax payable by him and it is always calculated at the prescribed rate on the basis of the actual amount of tax withheld and the extent of delay in paying it
It may not be wrong to say that such interest is compensatory in character and not penal
In order to understand the case of the assessee we may classify the registered dealers into the following different classes 1
A registered dealer who files his return showing a higher taxable turnover than the actual turnover which is ultimately found to be taxable at the time of regular assessment and who pays tax under section 72 of the Act on the basis of the return
A registered dealer who files a true and proper return and pays tax on the basis of such return within the time allowed
A registered dealer who does not file any return at all as required by section 71 and pays no tax under section 72 of the Act
595 4
A registered dealer who files a true return but does not pay the full amount of tax as required by section 72 and 5
A registered dealer who files a return but wrongly claims either the whole or any part of the turnover as not taxable and pays under section 72 of the Act that amount of tax which according to him is payable on the basis of the return
In the case of a registered dealer falling under class 1 no question of payment of interest would arise as the amount of tax paid by him at the time of filing the return is much more than what is actually due and payable by him under the Act
The extra tax paid by him becomes refundable after the regular assessment is completed in view of section 74 of the Act
In the case of a registered dealer falling under class 2 also no question of payment of interest arises as there is no shortfall in payment of the tax
If the contention of the assessee urged in this case is accepted no interest becomes payable even by registered dealers falling under classes 34 and 5 because a in the case of a registered dealer falling under class 3 who has not filed any return at all no occasion would arise to claim interest on any tax due on the basis of return  as there is no return at all
b in the case of a registered dealer falling under class 4 who files a true return but does not pay full amount of tax under section 72 the assessing authority is entitled to ignore it under sub rule 4 of Rule 25 of the Rules and when the return is not taken cognisance of there will be no return on the basis of which interest can be computed and c in the case of a registered dealer coming within the purview of class S who has filed a return but has wrongly claimed either the whole or any part of the turnover as not taxable and paid under section 72 of the Act only that amount of tax which according to him is payable as tax as he would have paid whatever is payable on the basis of the return
The resulting position would be that clause a of section 11B of the Act which clearly imposes the liability on the assessee who has not paid the tax due by him within the period allowed by law becomes either unworkable or meaningless
A fair reading of section I IB of the Act suggests that the Act expects that all assessees who are liable to pay sales tax should file a true return within the period prescribed under sub section I of section 7 and should 596 produce a treasury receipt or a receipt of any bank authorised to receive money on behalf of the State Government showing that full amount of tax due from them has been paid
The argument pressed before us on behalf of the assessee is that since section 7 of the Act does not expressly say that a registered dealer who has not filed any return or a person who has claimed that his turnover or any part thereof is not taxable and has not paid tax due in respect of such disputed turnover should also pay interest on the tax which is legitimately due to the Government but withheld by him no interest can be claimed under section 11B of the Act in such cases
Section 7 of the Act which deals with the submission of returns is not a charging section but a machinery section
It is settled law that a distinction has to be made by court while interpreting the provisions of a taxing statute between charging provisions which impose the charge to tax and machinery provisions which provide the machinery for the quantification of the tax and the levying and collection of the tax so imposed
While charging provisions are construed strictly machinery sections are not generally subject to a rigorous construction
The courts are expected to cons true the machinery sections in such a manner that a charge to tax is not defeated
The above rule of construction of a taxing statute has been adopted by this Court in India United Mills Ltd vs Commissioner of Excess Profits Tax Bombay in which section 15 of the Excess Profits Tax Act came up for consideration
The Court observed in that case thus That section is it should be emphasised not a charging section but a machinery section
And a machinery section should be so construed as to effectuate the charging section
 The above principle was followed by this Court in Gursahai Saigal vs Commissioner of Income tax Punjab in which is was observed thus Now it is well recognised that the rule of construction on which the assessee relies applies only to a taxing provision and has no application to all provisions in a taxing statute
It does not for example apply to a provision not 597 creating a charge for the tax but laying down the machinery for its calculation or procedure for its collection
The provisions in a taxing statute dealing with machinery for assessment have to be construed by the ordinary rules of construction that is to say in accordance with the clear intention of the legislature which is to make a charge levied effective
 In deciding Gursahai Saigal s case supra the Court followed the observations made by the Privy Council in Commissioner of Income tax vs Mahaliram Ramjidas and by the House of Lords in Whitney vs Commissioners af Inland Revenue
In the case of Mahaliram Ramjidas supra the Privy Council observed The section although it is a part of a taxing Act imposes no charge on the subject and deals merely with the machinery of assessment
In interpreting provisions of this kind the rule is that construction should be preferred which makes the machinery workable utres valeatpotius quam Pereat
 In Whitney s case supra Lord Dunedin made the following observations My Lords I shall now permit myself a general observation
Once that it is fixed that there is liability it is antecedently highly improbable that the statute should not go on to make that liability effective
A statute is designed to be workable and the interpretation thereof by a Court should be to secure that object unless crucial omission or clear direction makes that end unattainable
Now there are three stages in the imposition of a tax there is the declaration of liability that is the part of the statute which determines what persons in respect of what property are liable
Next there is the assessment
Liability does not depend on assessment
That exhypothesi has already been fixed
But assessment particularizes the exact sum which a person liable has to pay
Lastly come the methods of recovery if the person taxed does not voluntarily pay The circumstances under which the above principle was applied by this Court in Gursahai Saigal s case supra are interesting
That 598 was a case in which an assessee who was charged with interest under sub section 8 of section 18A of the Indian Income tax Act 1922 has questioned his liability to pay interest His contention was that interest payable under sub section 8 of section 18A of that Act had to be calculated in the manner laid down in sub section 6 thereof
Since sub section 6 of
section 18A of the Act provided that where in any year an assessee had paid tax under sub section 2 or sub section 3 thereof on the basis of his own estimate and the tax so paid was less than eighty per cent of the tax determined on the basis of regular assessment simple interest at the rate of six per cent per annum from the 1st day of January in the financial year in which the tax was paid upto the date of the said regular assessment should be payable by the assessee and as he had not paid any tax at all it was urged that it was not possible to calculate interest in the manner laid down in sub section 6
The Court rejected the contention of the assessee following the decision of the Privy Council and the House of Lords referred to above that the words from the Ist day of January in the financial year in which the tax was paid obviously could not literally be applied to a case where no tax had been paid but since on a true construction those words meant from the Ist day of January in the financial year in which the tax ought to have been paid the assessee was liable to pay interest
This Court observed It would not be doing too much violence to the words used to read them in this way The tax ought to have been paid on one or other of the dates earlier mentioned
The intention was that interest should be charged from January 1 of the financial year in which the tax ought to have been paid
Those who paid the tax but a smaller amount and those who did not pay tax at all would then be put in the same position substantially which is obviously fair and was clearly intended
Which is the precise financial year in any case would depend on its facts and this would make no difference in the construction of the provision
 We are in respectful agreement with the method of approach adopted by this Court in Gursahai Saigal s case supra
It is the duty of the Court while interpreting the machinery provisions of a taxing statute to give effect to its manifest purpose having a full view of it
Wherever the intention to impose liability is clear courts ought to have no hesitation in giving what we may call a common sense interpretation to the machinery sections so that the charge does not fail
599 In the present case if we construe the words on the basis of return occurring in sub section 2 of section 7 of the Act as on the basis of a true and proper return which ought to have been filed under sub section 1 of section 7 then all the three classes of persons viz i those who have not filed any return at all and who are later on found to be liable to be assessed ii those who have filed a true return but have not deposited the full amount of tax which they are liable to pay and iii those who have filed a return making a wrong claim that either the whole or any part of the turnover is nat taxable and who are subsequently found to have made a wrong claim would be placed in the same position and they would all be liable to ply interest on the amount of tax which they are liable to pay but have not paid as required by sub section 2 of section 7 of the Act
We are of opinion that this view is in conformity with the legislative intention in enacting section 11B of the Act
We have carefully gone through the decision of five learned judges of this Court in State of Rajasthan and Ors
vs Ghasi Lal and we are humbly of opinion that it is distinguishable from the present case
In Ghasi Lal case supra this Court was concerned with the question of sustainability of penalties imposed under the Act and not interest leviable under section 11B The relevant facts in that case were these Thee respondent therein who was a dealer within the meaning of the Act filed a writ petition in the High Court of Rajasthan challenging the making of assessment 13 on his turnover for the year 1955 56 on the ground that the Rules which had been published on March 28 1955 were invalid
On January 9 1958 the High Court passed an interim order stating that the petitioner will keep proper accounts and file the prescribed returns but shall not be assessed till further orders
While the petition was pending in the High Court ordinance No 5 of 1959 was promulgated on November 6 1959 validating the Rules
Thereupon the respondent therein withdrew the writ petition
On December 17 1959 the Rajasthan Sales Tax Validation Act Rajasthan Act 43 of 1959 replaced the Ordinance
The effect of the ordinance and the Validation Act was to validate the Rules even if any defect existed in the making of the Rules
On December 4 1959 the Sales Tax Officer called upon the respondent therein to pay tax due by him within a week as the writ petition had been withdrawn and dismissed
The respondent had filed his returns earlier and also had deposited certain amounts towards tax
On April 25 1960 the Sales Tax 600 Officer made an assessment in respect of the accounting period November 3 1956 to October 22 1957 and also proceeded to impose a penalty of Rs 400 under section 161 b of the Act
Justifying the imposition of penalty he observed thus The assessee has not deposited tax of the quarters on the due date the tax deposited for 4th quarter is very late ie after two years the assessee was given a notice and in reply to which he referred the stay order of the Hon ble High Court granted to him in a writ petition filed challenging the validity of sales tax rules made under the Act
The stay order of the Hon ble High Court does not say that the assessee is allowed to withhold the tax
On the contrary it directs that the petitioner assessee will keep proper accounts and file prescribed returns but shall not be assessed
This clearly shows that the assessee should have filed returns in time and according to section 72 the treasury challan of the deposit should have accompanied them
This amounts to contravention of the mandatory provisions
The writ was dismissed on 23 4 58 sic 23 11 59 even the amount was not deposited till 17 12 59
This shows that the assessee withheld the tax intentionally
The Deputy Commissioner of Sales Tax Appeal Kota dismissed the appeal upholding the above penalty
Similarly on December 6 1960 the Sales Tax Officer assessed the respondent in respect of accounting period October 23 1957 to November 10 1958 and imposed a penalty of Rs 1000 for not depositing the tax in time on the same grounds
The respondent questioned the penalties in respect of the aforesaid two years before the High Court
The High Court quashed them
Against the orders of the High Court the State of Rajasthan filed two appeals which were disposed of by this Court by the judgment rendered in the above case
The judgment of this Court depended upon the true construction of clause b section 161 of the Act which read 161 If any Person a       or b has without reasonable cause failed to pay the tax due within the time allowed or 601 c has without reasonable cause failed to furnish the return of his turnover or failed to furnish it within the time allowed or     the assessing authority may direct that such person shall pay by way of penalty in the case referred to in clause a in addition to the fee payable by him a sum not exceeding Rs 50 and in the case referred to in clause b in addition to the amount payable by him a sum not exceeding half of that amount and that in cases referred to in clauses c and d in addition to the tax payable by him a sum not exceeding half the amount of tax determined in the case referred to in clause e in addition to the tax payable by him a sum not exceeding double the amount of tax if any which would have been avoided if taxable turnover as returned by such person had been accepted as correct turn over and in the cases referred to in clauses f ff and g a sum not exceeding Rs 100 
Sikri J as he then was who delivered the judgment of this Court observed thus  In our opinion there has been no breach of section 161 b of the Act and consequently the orders imposing the penalties cannot be sustained
According to the terms of section 161 b there must be a tax due and there must be a failure to pay the tax due within the time allowed
There was some discussion before us as to the meaning of the words time allowed  but we need not decide in this case whether the words time allowed  connote time allowed by an assessing authority or time allowed by a provision in the Rules or the Act or all these things as we are of the view that no tax was due within the terms of section 161 b of the Act
Section 3 the charging section read with section 5 makes tax payable ie creates a liability to pay the tax
That is the normal function of a charging section in a taxing statute
But till the tax payable is ascertained by the assessing authority under section 10 or by the assessee under section 72 no tax can be said to be due within section 161 b of the Act for till then there is only a liability to be assessed to tax underlining by us
A careful reading of the above passage shows that this Court held that section 161 b which provided for the imposition of 602 penalty when an assessee had without reasonable cause failed to pay the tax due within the time allowed was not attracted as no tax was due within the terms of section 161 b even though it was payable by virtue of section 3 read with section 5 of the Act
Now section 11B a which provides for levying interest on failure to pay tax states that if the amount of any tax payable under sub sections 2 and 2A of section 7 is not paid within the period allowed the dealer shall be liable to pay interest at the prescribed rate during the time he continues to make default in the payments Section 11Ba of the Act does not refer to any tax due
At this stage it is necessary to refer to certain legislative changes that have taken place since the decision in Ghasilal s case supra was delivered
Section 161 c as it stood then has been amended and section 7AA providing for levy of penalty for failure to furnish returns has been inserted in the Act by Rajasthan Act 11 of 1969
Section 7AA reads thus 7AA
Penalty for failure to furnish returns If the assessing authority in the course of any proceedings under this Act is satisfied that any dealer has without reasonable cause failed to furnish the return under sub section 1 of section 7 within the time allowed he may direct that such dealer shall pay by way of penalty in addition to the amount of the tax if any payable by him a sum equal to two per cent of the tax for every month during which the default continued but not exceeding in the aggregate fifty per cent of the tax Section 161 as it now stands does not deal with levy of penalty for not filing the prescribed return as it is provided by section 7AA set out above
It is also to be pointed out that sub section 2A was inserted in section 7 by Rajasthan Act 13 of 1963 providing that notwithstanding anything contained in sub section 2 of section 7 the State Government may by notification in the official Gazette require any dealer or class of dealers specified therein to pay tax at intervals shorter than those prescribed under section 71
In such cases the proportionate tax on the basis of the last return has to be deposited at the intervals specified in the said notification in advance
These features clearly show that the tax that is payable under section 3 read with section 5 of the Act has to be paid along 603 with the return within the time allowed for that purpose and if section 72 applies it has to be paid in advance at stated intervals
Section 11B with which we are concerned was added by Rajasthan Act 11 of 1969
Clause a of section 11 states that if the amount of any tax payable under sub sections 2 and 2A of section 7 is not paid within the period allowed interest at the prescribed rate has to be paid on that amount from the day commencing after the end of the said period Period allowed  means period allowed by the Act and the Rules or such extended period under the proviso to section 71
It is thus clear that in cases to which section 72 of the Act applies interest has to be paid on the tax payable but which has not been paid from the last date on which the return has to be filed for the assessment year in question and in cases to which subsection 2A is applicable from the last date on which the advance tax has to be paid
The amount of interest has no doubt to be calculated after the actual amount of tax payable is assessed and necessary adjustments are made
We do not think that in taking the above view we have in any way disregarded the decision in Ghasilal s case supra in which the question of payment of interest under section 11B did not at all arise for consideration
Our learned Brother Bhagwati J in his opinion while dealing with the applicability of section 11Ba has observed that the scheme of taxation envisaged in the Act clearly shows that it is only when the assessment is made and specified in the notice of demand or in the absence of such specification thirty days from the date of service of such notice expires that the amount of tax as assessed becomes payable by an assessee
With great respect we have to state that we depend upon Ghasilal s case supra itself to hold that for purposes of section 11Ba the tax becomes payable before assessment is made by virtue of section 3 read with section 5 and sub sections 2 and 2A of section 7 of the Act and the Rules framed thereunder even though it becomes due when return is filed under section 72 or ascertained under section 10
That a tax can become payable even before assessment is also clear from the observations of Sikri J as he then was in Ghasilal s case supra to the effect that section 3 the charging section read with section 5 makes tax payable ie creates a liability to pay the tax 
But till the tax payable is ascertained by the assessing authority under section 10 or by the assessee under section 72 no tax can be said to be due 604 within section 161 b of the Act for till then there is only a liability to be assessed to tax
emphasis added We are of opinion that either by delaying the filing of the return or not filing it all or by filing a return wrongly claiming that a certain part of the turnover is not taxable or by not disclosing a part of the taxable turnover in the return an assessee cannot escape the liability to pay interest under section 11 Ba on the amount of tax withheld as a consequence of his own action or inaction from the last date on which it had to be paid as per sub section 2 or sub section 2A of section 7 as the case may be read with the Rules
An assessee cannot contend that interest does not accrue under section 11Ba on the tax payable by him where the time to file the return has elapsed until he actually files a return admitting the liability to pay such tax or until assessment is made
We are of the view that the statutory liability under section 11Ba arises wherever there is default in payment of the tax within the period allowed by law irrespective of any doubt which an assessee may be entertaining about the liability to pay the tax
It is not disputed in this case that freight charges had to be included in the taxable turnover of the assessee mentioned in the returns that were filed within the prescribed time under section 71 of the Act and that the tax payable in respect of freight charges should have been paid as required by sub section 2 of section 7 before the returns were filed
The fact that the question relating to the liability of the assessee to pay sales tax in respect of the freight charges was decided by the Supreme Court subsequently does not in any way affect the question which arises for consideration in this case
The decision of this Court did not create any new liability
It only declared that such a liability was existing at the relevant point of time
Since it is clear that the amount of tax due in respect of the freight charges which was payable under sub section 2 of section 7 was not paid within the period allowed section 1 IB is clearly attracted and the liability to pay interest as required by it arises
On behalf of the State Government an alternative contention was urged in support of the levy of interest on the tax payable in 605 respect of the freight charges relying upon the new section 11 which was substituted by the Rajasthan Sales Tax Amendment Act 1979 in the place of section 11 which was in force during the relevant period
The relevant part of the new section 11B reads thus 11B Interest on failure to pay tax fee or penalty 
1 a Where any registered dealer or any other dealer has furnished returns but has not paid the tax as per return or within the time allowed by or under the provisions of this Act he shall be liable to pay interest on the whole or that part of the amount of tax which was not paid as per returns within the time as aforesaid at the rate of one and a quarter per cent per month from the date by which he was required to pay the tax by or under the provisions of this Act for a period of three months and at one and a half per cent per month thereafter until the date of payment b Where any registered dealer or any other dealer has furnished a revised return as provided under sub section 3 of section 7 which revised return shows that amount of tax larger than that already paid is payable such dealer shall be liable to pay interest on the excess amount of tax at such rate and for such period as provided in clause a of this sub section as if such amount of tax payable as per the revised return was the amount of tax payable according to the original return    lt was contended that as clauses a and b of sub section 1 of section 11B extracted above were declaratory in character and merely explained what the Legislature meant by enacting section 11B as it stood before the substitution the assessee was liable to pay interest on the amount of tax payable in respect of freight charges under clause b of sub section 1 of the new section 11B Since we are of the view that the assessee was liable to pay interest on the tax in question under section 11B of the Act as it stood prior to tile amendment we do not find it necessary to express any opinion on this alternative contention urged on behalf of the State Government
In the result we allow the appeal in part and set aside the impugned orders to the extent they direct the assessee to pay the penalties
The appeal in so far as the levy of interest under the impugned orders is concerned is dismissed
In view of the circumstances of the case the parties shall pay and bear their own costs
606 ORDER In accordance with the opinion of the majority the appeal is allowed in part
The penalties imposed on the assessee under the impugned orders of assessment are set aside
The appeal in so far as the levy of interest is concerned is dismissed
The parties shall bear their own costs


Summary:
The appellant assessee a company manufactured cement which was sold partly in the State of Rajasthan and partly outside the State
The sales tax returns relating to the sales were filed by the assessee under the Rajasthan Sales Tax Act 1954 and under the before the Assessing Authority for the period August 1 1973 to July 31 1974 ie for the assessment year 1974 75
In those returns the assessee did not include in the taxable turnover the freight charges paid in respect of the goods sold under the bonafide impression that freight charges were not to be so includible in the taxable turnover in view of certain decisions rendered by the High Courts and the Supreme Court
The Supreme Court on August 29 1978 In Sugar Mills Limited vs State of Rajasthan and others held that freight charges formed part of the sale price and were includible in the taxable turn over of an assessee and that sales tax was payable thereon
Coming to know of the aforesaid decision the assessee prepared and filed the revised returns in respect of the assessment year 1974 75 before the Commercial Tax officer on October 20 1978 including freight charges in the turn over and also deposited along with the revised returns challans showing payment of the balance of the tax payable under the State Act as well as under the Central Act
The assessing authority passed two orders of assessment one under section 103 of the State Act and the other under section 9 of the Central Act
The former order of assessment levied a penalty of Rs 53353 under section 7AA of the State Act on account of the delay in depositing the sales tax payable in respect of the amount of freight charges and also levied interest of Rs 85910under section 11B of the State Act
In the latter order of assessment a penalty of Rs 134205 was levied under section 7AA of the State Act read with section 92 of the Central Act for the delay in depositing the tax payable in respect of the freight charges and interest of Rs 207174 was levied under section 11 of the State Act read with section 92 of the Central Act 564 In the appeals to this Court on the question whether A the Assessing Authority was right in imposing penalty on the assessee under the two assessment orders for not depositing the tax in respect of the amount of freight at the time of filing of the original returns under the State Act and the Central Act and B the assessee was liable under section 11B of the State Act to pay interest on the tax in respect of the amount of freight for the period between the date of filing of the original return and the date when such tax was actually paid while filing the revised return
 HELD By The Court A The levy of penalties for not including the freight charges in the taxable turnover in the original returns and for not paying the tax in respect of such freight charges is unsustainable and the two orders of assessment in so far as they levy penalty are liable to be quashed and set aside
571 B 589 B Cement Marketing Company of India Limited vs Commissioner of Sales Tax Indore  referred to
per Bhagwati J dissenting B1 So long as the assessee pays the amount of tax which according to him is due on the basis of the return filed by him there would be no default on his part in complying with the obligation under sub section 2 of section 7 and there would be no liability on him to pay interest under section 11B clause a because he would have paid the amount of tax quantified by him through the process of self assessment
The actual amount of tax payable by the assessee would be determined only when it is assessed by the Assessing Authority under section 10 and that would not be payable until the expiration of the period specified in the notice of demand or thirty days from the date of service of such notice as the case may be
584 D E 2 Since the assessee deposited the amounts of tax which according to him were due on the basis of the returns actually filed by him and the returns were accompanied by receipts showing deposit of such amounts of tax there was no default on the part of the assessee in paying the amounts of tax payable under sub section 2 of section 7 within the actual period allowed and in the circumstances no interest was payable by the assessee under section 11B clause a
586 F G State of Rajasthan vs Ghasi Lal  relied on
When the assessment is made and the tax payable by an assessee is determined the tax so determined does not become payable until after a notice of demand is served by the Assessing Authority under section 11 sub section 2 read with Rule 31 of the Rajasthan Sales Tax Rules 1955
The assessee is allowed time to make payment up to the date specified in the notice of demand and if no such date is specified then within thirty days from the date of service of the notice
So long the assessee pays up the amount of the tax assessed within the time specified in the notice of demand or within thirty days from the date of service of the notice as the case may be he would not be in default and hence 565 section 11B clause b provides that the assessee would be liable to pay interest on the tax assessed only if the amount of such tax is not paid within the period specified in the notice of demand or in the absence of such specification within thirty days from the date Of service of such notice and then too the liability to pay interest would commence not from the date of the assessment but from the day commencing after the end of the said period that is the period specified in the notice of demand or thirty days from the date of service of such notice as the case may be
Thus even after the assessment is made and the tax payable by an assessee is determined the assessee is not liable to pay interest on the amount of such tax until after the period specified in the notice of demand or in the absence such specification thirty days From the date of service of such notice have expired
574 D H 4
The language used in sub section 2 of section 7 is full amount of tax due on the basis of return
The return is the return Sled by the assessee under sub section 1 of section 7
When sub section 1 of section 7 requires an assessee to file a return the return filed must be correct and proper
If the return is not correct and proper the Assessing Authority may not give credence to the return and may refuse to assess the tax on the basis of the return and if the Assessing Authority finds that the assessee has concealed any particulars from the return furnished by him or has deliberately furnished inadequate particulars in the return the Assessing Authority may levy penalty on the assessee under section 16 sub section 1 clause e and the assessee may also be liable to be punished for an offence under Section 16 sub section 3 clause d for making a false statement in the return
Whether the return filed be correct or not the tax payable by the assessee under sub section 2 of section 7 would be the full amount of tax due on the basis of the return
The return actually filed by the assessee must be looked into in order to see what is the full amount of tax duo on the basis of such return
It is not the assessed tax nor is it the tax due on the basis of a return which ought to have been filed by the assessee but it is the tax due according to the return actually filed that is payable under sub section 2 of section 7
This provision is really in the nature of self assessment and what it requires is that whatever be the amount of tax due on the basis of self assessment must be paid up along with the filing of the return which constitutes self assessment
The plain words of sub section 2 of section 7 cannot be tortured to mean full amount of tax due on the basis of return which ought to have been filed but which has not been filed
576 B F 5
The legislature could never have intended that the assessee should be liable on pain of imposition of penalty to deposit an amount which is yet to be ascertained through assessment
How would the assessee know in advance what view the Assessing Authority would take in regard to the taxability of any particular category of sales or the rate of tax applicable to them and deposit the amount of tax on that basis  Even in regard to the liability to pay interest it does not stand to reason that the legislature should have subjected the assessee to such liability for non payment of an amount of which the liability for payment is still to be ascertained
577 F G 6
The tax payable under sub section 2 of section 7 dealt with in clause a of section 11B cannot be equated with the amount of the tax assessed forming the subject matter of clause b of section 11B and hence it must 566 be tax due on the basis of the return actually filed by the assessee and not on the basis of a correct and proper return which ought to have been filed by him
578 G H 7
The scheme of taxation envisaged in the State Act clearly shows that it is only when the assessment is made and the period specified in the notice of demand or in the absence of such specification thirty days from the date of service of such notice expires that the amount of tax as assessed becomes payable by the assessee and its payment can be enforced by the Revenue
What becomes payable by the assessee under sub section 2 of section 7 is merely the tax due on the basis of the return actually filed by the assessee that is on the basis of self assessment
579 F G 8
On a true construction of the provisions of the State Act tax becomes due from the assessee and is payable by him only when it is ascertained by the Assessing Authority under section 10 or by the assessee under section 72
Till then there is only the liability of the assessee to be assessed to tax and no tax can be said to be payable by the assessee
The tax payable is ascertained when the assessment is made by the Assessing Authority under section 10 or when the assessee himself quantifies it through the process of self assessment under subsection 2 of section 7
These two amounts of tax may and in quite a number of cases would be different because one is ascertained by the Assessing Authority through the process of assessment and that is why sub section 4 of section 7 provides that every deposit of tax made under sub section 2 shall be deemed to be provisional subject to necessary adjustments in pursuance of final assessment of tax made under section 10
This provision clearly contemplates that the tax payable under sub section 2 of section 7 may be different from the tax assessed under section 10 and it cannot therefore obviously be the tax due on the basis of a correct and proper return but must be the tax due on the basis of the return actually filed
580 D G 9i it is clear from the language of subsection 2 of section 7 that it is only on the filing of the return that the liability to pay the tax due on the basis of the return arises
If no return is filed within the prescribed time it would undoubtedly constitute a default attracting penalty under section 16 sub section 1 clause n but there would be no liability on the assessee to pay interest on the amount of the tax because the liability to pay the tax due on the basis of the return under sub section 2 of section 7 can arise only when the return is filed There is no liability on the assessee to pay any amount by way of tax until the return is filed or the assessment is made
581 H 582 B ii It can neither be held that section 7 sub section 2 is attracted even when no return has been filed
It is clear that until the assessee files a return or assessment is made no tax is payable by the assessee because till then there is only a liability to be assessed to tax
The conclusion that a registered dealer who does not file any return at all as required by sub section 1 of section 7 would still be liable to pay the amount of tax and if he does not pay the same before the due date for filing the return he would be liable to pay interest under section 11b clause a cannot be accepted
This would be contrary to the decision of this Court in State of Rajasthan vs Ghasi Lal   582 C F 567 per AP Sen and Venkataramiah JJ B1
The statutory liability under section 11B arises wherever there is default in payment of the tax within the period allowed by law irrespective of any doubt which an assessee may be entertaining about the liability to pay the tax
604 D E State of Rajasthan vs Ghasi Lal  distinguished
Tax interest and penalty are three different concepts
Tax becomes payable by an assessee by virtue of the charging provision in a taxing statute
Penalty ordinarily becomes payable when it is found that an assessee has willfully violated any of the provisions of the taxing statute
Interest is ordinarily claimed from an assessee who has withheld payment of any tax payable by him and it is always calculated at the prescribed rate on the basis of the actual amount of tax withheld and the extent of delay in paying it
It may not be wrong to say that such interest is compensatory In character and not penal
594 D F 3
Registered dealers can be classified into the following different classes 1 A registered dealer who files his return showing a higher taxable turnover than the actual turnover which is ultimately found to be taxable at the time of regular assessment and who pays tax under section 72 of the Act on the basis of the return
2 A registered dealer who files a true and proper return and pays tax on the basis of such return within the time allowed
A registered dealer who does not file any return at all as required by section 71 and pays no tax under section 72 of the Act
A registered dealer who files a true return but does not pay the full amount of tax as required by section 72 and 5 A registered dealer who files a return but wrongly claims either the whole or any part of the turnover as not taxable and pays under section 72 of the Act that amount of tax which according to him is payable on the basis of the return
In the case of a registered dealer falling under class 1 no question of payment of interest would arise as the amount of tax paid by him at the time of filing the return is much more than what is actually due and payable by him under the Act
The extra tax paid by him becomes refundable after the regular assessment is completed in view of section 74 of the Act
In the case of a registered dealer falling under clause 2 also no question of payment of interest arises as there is no shortfall in payment of the tax
594 F 595D 4
A fair reading of section 11 of the Act suggests that the Act expects that all assessees who are liable to pay sales tax should file a true return within the period prescribed under sub section 1 of section 7 and should produce a treasury receipt or a receipt of any bank authorised to receive money on behalf of the State Government showing that full amount of tax due from them has been paid
595 H 596 A  5
It is settled law that a distinction has to be made by court while interpreting the provisions of a taxing statute between charging provisions which impose the charge to tax and machinery provisions which provide the machinery for the quantification of the tax and the levying and collection of the tax so imposed
While charging provisions are construed strictly machinery sections are not generally subject to a rigorous construction
The courts are 568 expected to construe the machinery sections in such a manner that a charge to tax is not defeated
596 C D India United Mills Ltd vs Commissioner of Excess Profits Tax Bombay   Gursahai Saigal vs Commissioner of Income tax Punjab  Commissioner of Income tax vs Mahaliram Ramjidas AIR and Whitney vs Commissioners of Inland Revenue  referred to
If the words on the basis of return  occurring in sub section 2 of section 7 of the Act are construed as on The basis of a true and proper return which ought to have been filed under sub section 1 of section 7 then all the three classes of persons viz i those who have not filed any return at all and who are later on found to be liable to be assessed ii those who have filed a true return but have not deposited the full amount of tax which they are liable to pay and iii those who filed a return making a wrong claim that either the whole or any part of the turnover is not taxable and who are subsequently found to have made a wrong claim would be placed in the same position and they would all be liable to pay interest on the amount of tax which they are liable to pay but have not paid as required by sub section 2 of section 7 of the Act
This view is in conformity with the legislative intention in enacting section 11B of the Act 599 A C 7
In cases to which section 72 of the Act applies interest has to be paid on the tax payable but which has not been paid from the last date on which the return has to be filed for the assessment year in question and in cases to which sub section 2A is applicable from the last date on which the advance tax has to be paid
The amount of interest has however to be calculated after the actual amount of tax payable is assessed and necessary adjustments are made
609 B C 8
Either by delaying the filing of the return or not filing it all or by filing a return wrongly claiming that a certain part of the turnover is not taxable or by not disclosing a part of the taxable turnover in the return an assessee cannot escape the liability to pay interest under section 11B on the amount of tax with held as a consequence of his own action or inaction from the last date on which it had to be paid as per sub section 2 or sub section 2A of section 7 as the case may be read with the Rules
An assessee cannot contend that interest does not accrue under section 11B on the tax payable by him where the time to file the return has elapsed until the actually files a return admitting the liability to pay such talc or until assessment is made
604 B D