HIGH COURT OF UTTARAKHAND AT NAINITAL Commercial Tax Revision No.06 of 2011 M/s Century Pulp & Paper …Revisionist Versus The Commissioner, Commercial Tax Dehradun ...Respondent Mr. Monish Panda holding brief of Mr. P.R. Mullick, learned counsel for the revisionist. Mr. Sudhir Kumar, learned Brief Holder for the respondent. Dated : February 19, 2011 Coram: Hon’ble Barin Ghosh, C.J. Hon’ble V.K. Bist, J. Barin Ghosh, C.J. (Oral) The question in this revision is whether Sub Section 4 of Section 34 or Sub Section 6 of Section 34 of the Uttarakhand VAT Act, 2005 applies to the case of the revisionist. Those sub sections are set out below:- 34. Payment and Recovery of tax: Sub Section 4: The tax admittedly payable shall be deposited within the time prescribed failing which simple interest at the rate of fifteen percent per annum shall become due and be payable on the unpaid amount with effect from the date immediately following the last date prescribed till the date of payment of such amount. Explanation (1)-- For the purpose of this sub- section, the tax admittedly payable means the tax which is payable under this Act on the turnover of sales, or as the case may be, the turnover of purchases or of both, as disclosed in the accounts maintained by the dealer or admitted by him in any return or proceeding under this Act, whichever is greater. 2 Explanation (2)--“Month” shall mean thirty days and the interest payable in respect of period of less than one month shall be computed proportionately. Sub Section 6: If the tax [other than the tax admittedly payable to which sub-section (2) applies] assessed, reassessed or enhanced by any authority or Court remains unpaid for three months after expiration of the period specified in the order of assessment and demand notice, a simple interest at the rate of nine percent per annum on unpaid amount calculated from the date of such expiration shall become due and be payable: Provided that the amount of interest under this sub-section shall be recalculated if the amount of tax is varied on appeal or revision or by any order of a competent Court. 2. Facts of the case to which there appears to be no dispute are that on or before 6th January, 2003 revisionist was an existing manufacturer and a registered dealer under the said Act. On 16th March, 2005 a notification was issued whereby, a manufacturer whose commercial production has commenced on or after January, 7th 2003 became entitled to pay tax at the rate of 1% on submission of certificate in declaration Form-C and Form-B for a period of five years from the date of commencement of production. The notification, however, did not apply to certain manufacturers whose products had been mentioned in the said notification. 3. The commercial production of the revisionist having not commenced on or after January, 7 2003 and the same having commenced much before 7th January, 2003, the revisionist was outside the purview of the said notification dated 16th March, 2005. 3 4. However, on 17th January, 2007 i.e. after almost two years from the date of the said notification, revisionist wrote a letter to the Deputy Commissioner (Assessment) and thereby, held out that it is entitled to the benefit of the said notification dated 16th March, 2005. By a letter dated 10th May, 2007, Deputy Commissioner (Tax Assessment) rejected the contention of the revisionist as contained in its letter dated 17th January, 2007. While doing so, it was held out that the manufacturing unit of the revisionist is not situated within the area specified in the notification and that the product manufactured by the revisionist is in the negative list of the notification. 5. In the meantime, from April, 2007 revisionist started submitting return and thereby indicated that it is liable to pay tax at the rate of 1%. There appears to be no dispute that liabilities thus shown in such returns were met within time. 6. It appears that the revisionist thereupon filed an application under Section 30 of the Act contending that a mistake has occurred in the said letter of the Deputy Commissioner (Assessment) dated 10th May, 2007. This application was filed on 18th May, 2007, proceeding on the basis that the said letter dated 10th May, 2007 is an order and accordingly, the same is rectifiable under Section 30 of the Act. In the said application, purported to have been made under Section 30 of the Act, it was sought to be demonstrated that the manufacturing unit of the revisionist is situate within the area mentioned in the notification and that the product manufactured by it is not in the negative list. 4 This application was rejected on 12th November, 2008 holding that the application is not maintainable under Section 30 of the Act inasmuch as, the letter dated 10th May, 2007 of the Deputy Commissioner (Tax Assessment) was not an order. It was also indicated that at the same time, there is no scheme under which an existing manufacturer is entitled to pay tax at the rate of 1%. 7. The revisionist did not dispute the contention of the Deputy Commissioner (Assessment) contained in his letter dated 11th November, 2008 written to the revisionist whereby, it was indicated, amongst others, that the order of the Deputy Commissioner (Assessment) dated 10th May, 2007 was not an order amenable to Section 30 of the Act. 8. Soon thereafter, provisional assessment was made. In course of such assessment, it was adjudged that the revisionist is liable to pay tax at rates more than 1%. The provisional assessment was accepted by the revisionist and it paid the tax thus assessed. It is being contended, which we believe to be correct, that such assessed tax has been paid by the assessee much before expiry of three months from the date of assessment. 9. However, while assessment was made, the Assessing Officer adjudged interest liability of the revisionist under Sub Section 4 of Section 34 of the Act. Aggrieved thereby, revisionist approached the appellate authority and after having had lost before it, went before the Tribunal, where again it lost. 5 10. It was all through out the contention of the revisionist, which is being repeated before us, that there was a dispute as to liability on the part of the revisionist to pay tax in excess of 1% and the same was settled only on 12th November, 2008 followed by the provisional assessment and accordingly, statutory interest liability of the revisionist is governed by Sub Section 6 of Section 34 of the Act. On the other hand, it is the contention of the Revenue right from the beginning that there was no dispute inter-se the parties as regards liability of the revisionist to pay tax at rates more than 1% and accordingly, statutory liability of the revisionist to pay interest is governed by Sub Section 4 of Section 34 of the Act. 11. The learned counsel for the revisionist has drawn our attention to various judgments including the judgments of the Hon’ble Supreme Court rendered in the case of J.K. Synthetics Limited vs Commercial Taxes Officer, reported in (1994)4 Supreme Court Cases, 276 and Commissioner of Sales Tax vs Hindustan Aluminium Corporation, reported in Sales Tax Cases, vol.127, page 258. 12. In the matter of fixing liability under a taxing statute, one is required to take note of the words used by the legislature. A plain reading of Sub Section 6 of Section 34 of the Act would make it amply clear that the said Sub Section applies to assessment or reassessment of tax or enhancement thereof by any authority or Court. Therefore, if tax payable is assessed or reassessed or enhanced by an authority, competent to do so under the Act or by a Court, then only Sub Section 6 of Section 34 would apply. 6 13. Whereas, Sub Section 4 of Section 34 would apply when tax admittedly payable has not been paid within the time prescribed. What is tax admittedly payable has been explained by the legislature. While doing so, the legislature has not said tax admittedly payable would be only those disclosed by the assessee in his return. On the other hand, the legislature while explaining tax admittedly payable has specifically stated that the same would also connote such tax which is payable under the Act on the turnover of sales as disclosed in the accounts. 14. As aforesaid, the subject notification is dated 16th March, 2005. In terms thereof, a manufacturer is entitled to the benefit thereof from 7th January, 2003 or soon thereafter but not later than 31st March, 2007 for a period of five years. Revisionist was a manufacturer, whose commercial production commenced much before 7th January, 2003. The revisionist continued to manufacture and sell its products since after 7th January 2003. It went on doing so upto March, 2007. It accepted that it is liable to pay tax at rates more than 1% for such sale. It submitted returns to that effect for the period upto 31st March, 2007. From April, 2007, it started furnishing returns showing that it is liable to pay tax at the rate of 1% on the basis of its letter dated 17th January, 2007 making an unjust claim that it is covered by the said notification dated 16th March, 2005. The said contention was rejected by a letter dated 10th May, 2007 addressed to it. Purporting to contend that the said letter dated 10th May 2007 is an order, the revisionist filed a rectification 7 application under Section 30 of the Act. When it was pointed out to the revisionist on 11th November, 2008 that the said letter dated 10th May, 2007 was not an order amenable to rectification under Section 30 of the Act, the assessee did not dispute the same. The facts as above, squarely disclose that there was no dispute at all but the assessee purported to set up a boggy of a dispute by making an unjust claim by the letter dated 17th January, 2007. After having had acted in the manner it was obliged to act for a period of roughly two years from the date of publication of the notification in question, the revisionist by purporting to write a letter on 17th January, 2007 purported to wriggle out from its admission as regards payablity of tax by it. If such an action on the part of the assessee can be said to be not covered by Sub Section 4 of Section 34 of the Act, the same would permit the assessee to hoodwink tax law made by the legislature. Be that as it may, there is no dispute as regards turnover of sales as disclosed in the accounts and tax payable thereon under the Act. 15. We are therefore, also of the opinion that Sub Section 4 of Section 34 applied in the case and not Sub Section 6 of Section 34 of the Act. 16. In the judgments of the Supreme Court referred above, there were bonafide disputes which were sorted out. In the instant case, there was no dispute at all. A boggy of a dispute was projected for the purpose of hoodwinking the tax statute. The revision application fails and the same is dismissed accordingly. 8 17. After we delivered the judgment, learned counsel for the revisionist submitted that his client be permitted to pay interest by instalment. We accordingly, allow the prayer and permit interest to be paid by eighteen equal instalments, the first of which should be paid within 30 days from today. (V.K.Bist, J.) (Barin Ghosh, C.J.) 19.02.2011 Arti