In the High Court of Punjab and Haryana, Chandigarh G.S.T.R. No. 8 of 1996 Date of Decision: January 27, 2009 M/s Desh Vijay Hosiery Factory, Ludhiana …Applicant Versus State of Punjab …Respondent CORAM: HON’BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE H.S. BHALLA Present: None for the applicant. Ms. Sudeepti Sharma, DAG, Punjab, for the respondent. 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? Yes M.M. KUMAR, J. In pursuance to order dated 30.7.1996, passed by this Court in STC No. 28 of 1994, filed by the applicant under Section 22 (2) of the Punjab General Sales Tax Act, 1948 (for brevity, ‘the Act’) the Sales Tax Tribunal, Punjab, Chandigarh (for brevity, ‘the Tribunal’) has referred the following question of law for adjudication of this Court:- “Whether in the facts and circumstances of the case the petitioner was liable to pay interest from the date of G.S.T.R. No. 8 of 1996 filing of return or from the date of revising the assessment when the tax had become actually due.” 2. Brief facts of the case as discernible from the reference order dated 14.10.1996 passed by the Tribunal, are that the case of the applicant-dealer, who is a registered dealer under the Sales Tax Laws deals in hosiery goods, in respect of assessment year 1982-83 was taken up for assessment and the assessment proceedings were commenced on 11.10.1984. It is alleged that the dealer willfully sought adjournments on 59 occasions from 29.10.1984 to 20.2.1987. Later on the case was transferred to Assessing Authority, Ludhiana- II, who also granted various opportunities to the dealer from 5.8.1987 to 23.2.1988. On 28.10.1982, a surprise inspection was conducted at the business premises of the dealer and some documents were impounded for verification by the Assessing Authority. The dealer failed to produce the account books despite availing opportunities. A notice was given for making addition of Rs. 2,00,000/- on account of suppressed sales. Ultimately, addition of Rs. 2,00,000/- was made to the declared turnover of Rs. 6,45,098.19 and an additional demand of Rs. 24,557/- was raised including a penalty of Rs. 10,000/- under Section 10(7) of the Act, vide order dated 23.2.1988, passed by the Assessing Authority, Ludhiana-III. 3. The applicant filed an appeal and the Appellate Authority-Deputy Excise and Taxation Commissioner (A) remanded the case to the Assessing Authority, vide order dated 23.9.1988, with a direction to proceed afresh after confronting the impounded documents to the applicant and establishing on record the ownership 2 G.S.T.R. No. 8 of 1996 of those documents with the applicant as well as actual suppression of sale as per entries in the impounded documents in relation to the account books of the applicant. This time, the Assessing Authority did not make any addition due to surprise inspection and framed assessment vide order dated 18.1.1989 with refund of Rs. 14,523.67. It was concluded that the documents are not connected with the business of the applicant. 4. During scrutiny of order dated 18.1.1989 passed by the Assessing Authority, the Assistant Excise and Taxation Commissioner, Ludhiana-III, exercising the powers of Commissioner, found that the addition due to surprise inspection has been wrongly waived off. Accordingly, Revisional Authority initiated suo motu revision proceedings to revise the assessment order. 5. On 20.10.1991, an additional demand of Rs. 54,794/- including tax of Rs. 17,606/-, penalty of Rs. 200/- under Section 23 and penalty of Rs. 8,500/- under Section 10(7) and interest of Rs. 20,688/- under Section 11-D of the Act was raised. Against order dated 20.10.1991 revision was filed before the Tribunal. The Tribunal considered the question ‘whether the Assistant Excise and Taxation Commissioner can proceed under Section 21 of the Act when the order of assessing authority had merged with the order passed by the Deputy Excise and Taxation Commissioner (A)’. After considering the matter, vide its order dated 30.9.1992, the Tribunal rejected the plea of merger raised by the applicant. The Tribunal, however, recorded a finding in favour of the applicant that the ‘labour bahi’ impounded by the department indicates that the 3 G.S.T.R. No. 8 of 1996 applicant paid wages worth Rs. 53,340/- only while the ‘Half Day Book’, which serves as ‘Mini Cash Book’ indicates the case in hand of Rs. 37,360/-. The Tribunal, thus, reduced the addition of Rs. 4,50,000/- made by the revisional authority to Rs. 3,00,000/-. The penalty under Section 10(7) was also reduced from 8,500/- to Rs. 6,000/-. The Tribunal, however, refused to interfere with regard to charging of interest and ordered that the same be calculated and charged on the amount of tax which may be found due on the basis of addition of Rs. 3,00,000/-. 6. Against the order dated 30.9.1992, passed by the Tribunal, the applicant filed a reference application before the Tribunal, which was declined vide order dated 11.10.1993. Feeling aggrieved, the applicant filed STC No. 28 of 1994, under Section 22 (2) of the Act, in this Court, which was allowed vide order dated 30.7.1996 and accordingly the question of law mentioned in para 1 above has been referred by the Tribunal for our adjudication. 7. After hearing learned State counsel for the revenue and perusing the paper book with her able assistance we are of the considered view that the matter is no longer res integra. A similar question of law has already been answered by a Division Bench of this Court in favour of the assessee and against the revenue in the case of Chaudhary Tractor Company v. State of Haryana, [2007] 8 VST 10 (P&H), holding that the assessee is not liable to pay interest for the period before the demand was raised against him. The Division Bench also referred the judgments of Hon’ble the Supreme Court rendered in the cases of J.K. Synthetics Ltd. v. Commercial 4 G.S.T.R. No. 8 of 1996 Taxes Officer, [1994] 94 STC 422; Frick India Limited v. State of Haryana, [1994) 95 STC 188 and Maruti Wire Industries Pvt. Ltd. v. Sales Tax Officer, [2001] 122 STC 410 and a Full Bench judgment of this Court in the case of United Riceland Limited v. State of Haryana, [1997] 104 STC 362 wherein it has been concluded that ‘the petitioners cannot be directed to make the payment of interest for any period prior to the actual demand made for the payment of purchase tax under the provisions of the Act’. In the case of Chaudhary Tractor Co. (supra) the revisional authority had levied interest on the petitioner for the period prior to raising of demand. 8. Respectfully following the above enunciation of law, the question of law raised in the instant case is decided in favour of the applicant and against the revenue. (M.M. KUMAR) JUDGE (H.S. BHALLA) January 27, 2009 JUDGE Pkapoor 5