IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 19.08.2011 Coram The Honourable Mrs.Justice CHITRA VENKATARAMAN and The Honourable Mr.Justice M.JAICHANDREN WP.Nos. 4831 and 4832 of 2006 M/s. Kongoor Textile Process Tirupur, Coimbatore District rep. By its Partner ... Petitioner in both the WPs -vs- 1. The Joint Commissioner (CT) (Revision Petition) Office of the Commissioner of Commercial Taxes Chepauk, Chennai – 5 2. The Commercial Tax Officer Tirupur (Rural) Circle Tirupur, Coimbatore District. ... Respondents in both WPs Petitions under Article 226 of the Constitution of India praying to issue a writ of certiorari to call for the records of the first respondent in R.P.Nos. J2/44/2005 and J2/85/2004 respectively and quash the order dated 30.12.2005. For Petitioner in both WPs. : Mr.Md. Ghafoorur Rahman For respondent in : Mr.R.Sivaraman, both WPs. Special Government Pleader (Taxes) https://hcservices.ecourts.gov.in/hcservices/ ORDER (Order of the Court was made by CHITRA VENKATARAMAN,J) The assessee is on writ petitions as against the order of the Joint Commissioner of Commercial Taxes relating to assessment year 1992-93 and 1993-94. 2. The petitioner is a dyeing contractor who had effected interstate purchases of Dyes and Chemicals. Originally the assessee was under the impression that chemicals purchased and used in the execution of the dyeing contract were exempted from tax under Section 3-B(2)(b) of the Tamil Nadu General Sales Tax Act. The tax liability on the cost of consumables like dyes and chemicals used in execution of dying was a debatable one involving question of law, there was no settled law on this issue and therefore, the assessing authorities kept the assessment pending 1986-87 onwards. 3. The Tamil Nadu Taxation Special Tribunal in the case of PERUMAL COLOUR COMPANY AND OTHERS v. STATE OF TAMIL NADU AND OTHERS reported in 105 STC 223 remanded the matters relating to the dyeing contract to the respective Assessing Officers with the direction to demonstrate and to determine whether any transfer of property to goods was involved therein for the purpose of considering the same for chargeability. Based on that, there was a demonstration in the presence of members of the Tirupur dyer's Association. It was pointed out that in the case dyes, there was 50% of transfer of property and in the case of chemicals, there was no transfer of property at all. Based on the resolution, the assessee paid the taxes on 50% of the dyes used in the dying contractor. By filing a revised return admitting the liability to the extent of 50% on the dyes used, the assessment was finalised. Having regard to the admission, the assessee paid the tax thereon under the revised return. After adjusting the demand raised with tax paid to the extent of Rs.53,981/- voluntarily under the revised return in the form of interest, penalty was levied under Section 24(3) of the Act to the extent of Rs.53,981/-. Aggrieved by this, the assessee went on revision before the Deputy Commissioner, who dismissed the revision petitions. Hence, the assessee went on further revision before the Joint Commissioner. 4. A perusal of the order of the Joint Commissioner shows his affirming view of the Deputy Commissioner. The assessee took the plea that when they had voluntarily paid the taxes under the revised return and the adjustment was also made accepting the return, thereby, balance of tax was noted as NIL, the question of levy of penal interest under Section 24(3) of the Act as such https://hcservices.ecourts.gov.in/hcservices/ did not arise. The assessee pointed out that when the liability itself was in doubt originally and the exemption is claimed, on the remand order made by the Special Tribunal the demonstration was conducted and immediately thereafterwards in all good faith the assessee paid the tax to the extent of 50% of the dyes used in the dyeing contract, the question of levying penal interest did not arise. The Joint Commissioner however rejected the said contention and pointed out that the assessee had not paid the tax legally due to the State in time and in accordance with the provisions of the Act. Since the provisions relating to the levy of interest under Section 24(3) of the Act is an automatic for the belated payment, rightly the penalty was levied by the Assessing Officer. Thus the revision petitions were dismissed. Aggrieved by the same, present writ petitions. 5. Learned counsel for the assessee reiterating the stand taken by the assessee before the authorities below and placed reliance on the decision of the Apex Court reported in 141 STC 12 – E.I.D. PARRY (INDIA) LIMITED v. ASSISTANT COMMISSIONER OF COMMERCIAL TAXES and submitted that only when the assessee had paid the tax as shown in the return and the same had been given adjustment in the demand, the interest under Section 24(3) of the Act could be levied. In the circumstances, the said levy of penalty was not correct. 6. We do not agree with the said claim. As admitted by the assessee in the original return filed, the assessee did not offer the turnover relating to the dyes used in the dyeing contract for the purpose of assessment in the sense that the assessee claimed exemption voluntarily. This was on the basis of the view held by the assessee that in the execution of the works contract, purchase of dyes and chemicals would not involve any transfer of property in goods to attract the tax liability under Section 3-B of the Act. However, the Tribunal set aside the assessments in a batch of cases with a direction that demonstration to be conducted. The assessee demonstrated its liability and to an extent of 50% of the dyes used in the execution of the works contract, the assessee paid the tax. Thus, when once the revised return or original return is filed, admitting the liability, the payment is treated as to a liability date backs to the date when the payment of tax ought to have been made. When once there is default in the payment of tax in accordance with the provisions of the Act, the assessee becomes defaulter, thus attracting penal consequences as given under Section 24 of the Act. 7. Section 24(3) is a specific provision on levy of penal interest on the belated payment of tax. Wherever the assessee defaults in meeting the admitted tax liability within the https://hcservices.ecourts.gov.in/hcservices/ statutory period, interest is leviable and is an automatic one. Consistently, the view as regards levy of interest is that it is an automatic levy and there is no question of discretion reserved in the matter of levy of penalty. In the light of the above and on the admitted fact that the assessee had filed revised return, admitting its liability relating to assessment year 1992-93, long after the assessment year i.e. during the year 1999, we have no hesitation in confirming the levy of penal interest under Section 24(3) of the Act. 8. As regards reliance placed on the decision of the Apex Court reported in 141 STC 12 – E.I.D. PARRY (INDIA) LIMITED v. ASSISTANT COMMISSIONER OF COMMERCIAL TAXES, we hold that the decision would not have any assistance to the assessee since, the same was based on the peculiar facts and circumstance of the case therein. The assessee therein is manufacturer of Sugar. In respect of purchase of sugarcane, apart from initial price fixed under the Control Order, additional price was fixed at the end of the sugar season. In the monthly return, the assessee offered initial price paid on the receipt of the sugarcane. Subsequently, revised return was submitted. When additional price was fixed, the tax thereon was thereafter paid. In respect of liability to tax, the Apex Court considered the levy of interest as regards the provisional assessment under Section 13 of the Act. The Apex Court pointed out that till the end of the each sugar year, it was not possible for the assessee to determine what would be the additional price under clause 5 under the Sugar Control Order. Thus, when the price was not fixed, the question of any liability on the assessee to offer the same in the monthly return did not arise. Referring to Section 13(2) of the Tamil Nadu General Sales Tax Act, the Apex Court pointed out that the tax payable under Section 13(2), would be as per the determination made by the Officer. The Apex Court pointed out that on the facts of the case, it was clear that the assessee had paid the tax as per the monthly return and there was no assessment, even provisional, by the assessing authority prior to the final assessment made after the revised returns had been filed. Thus, on the facts therein, the Apex Court held that there was no provision under the Act which permits charging of interest unless and until there has been a provisional assessment and a notice of demand prescribing the period within which the tax was to be paid. 9. Section 24(1) of the Tamil Nadu General Sales Tax Act states that the tax assessed are payable under the Act shall be paid in such a manner and in such time as may be prescribed under the Act. Sub Section (3) levies interest on the amount due at 2% per month till dues are payable by the dealer in case of self assessment. If the payment of tax is delayed beyond the https://hcservices.ecourts.gov.in/hcservices/ period prescribed under the Act, the interest is payable under the provisions of the Act. 10. Dealing with the interest leviable on belated payment of tax in the decision reported in 97 STC 44 – GODREJ & BOYCE MANUFACTURING CO., LTD v. JOINT COMMISSIONER OF COMMERCIAL TAXES -IV, this Court held that the last date for payment of tax due as well as for filing returns in the case of dealers opting self assessment is the 20th of the succeeding month. Where the returns are filed subsequent to the prescribed date, the interest is leviable under Section 24(3) of the Tamil Nadu General Sales Tax Act. Dealing with the case of a dealer filing revised return after the due date and paying the difference in tax, this Court held that liability to pay interest under Section 24(3) is automatic and absolute from the date on which it becomes due under the Tamil Nadu General Sales Tax Rules, 1959. In deciding the applicability of Section 24(3) interest, the question of bona fides on the part of the dealer voluntarily filing a return/ revised return after the due date showing the actual turnover is not at all relevant. In the light of the decision on the liability to pay interest on default in payment of tax or on the tax payable or on the belated payment of tax in violation of the provisions of the Act and the Rules prescribing the time for filing the return, we do not find that the assessee has a case for acceptance. On the admitted fact herein that the assessee had filed a revised return admitting its liability relating to the assessment years 1992-93 on 25.2.1997, 28.1.1999 and 28.1.1999 and paid a sum of Rs.38,199/- Rs.6348/- and Rs.6878/- respectively with a delay of 1394, 2096 and 2096 days respectively, we have no hesitation in confirming the order on the levy of penal interest. 11. As far as the present case is concerned, as already pointed out, the assessee admitted its liability in the form of revised return. When once in the revised return the assessee admitted its liability to the assessment year 1992-93 and paid tax, applying the decision of this Court reported 97 STC 44 – GODREJ & BOYCE MANUFACTURING CO., LTD v. JOINT COMMISSIONER OF COMMERCIAL TAXES -IV, we have no hesitation in holding that Section 24(3) of the Act stood attracted. Hence, we have no https://hcservices.ecourts.gov.in/hcservices/ hesitation in confirming the view of the Tribunal. The writ petitions are dismissed. No costs. Sd/ Deputy Registrar /true copy/ Sub Asst.Regitrar bg To 1. The Joint Commissioner (CT) (Revision Petition) Office of the Commissioner of Commercial Taxes Chepauk, Chennai – 5 2. The Commercial Tax Officer Tirupur (Rural) Circle Tirupur, Coimbatore District. 1 cc To The Spl. Government Pleader, SR.51800 WP.Nos. 4831 and 4832 of 2006 gr[co] gp/7.10. https://hcservices.ecourts.gov.in/hcservices/