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Karsandas and Brothers Vs. the State of U.P. and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAllahabad High Court
Decided On
Case Number Civil Misc. Writ Petition Nos. 494 of 1979 and 19, 67, 213, 214 and 247 of 1980
Judge
Reported in[1982]50STC82(All)
AppellantKarsandas and Brothers
RespondentThe State of U.P. and ors.
DispositionPetition dismissed
Excerpt:
- .....is necessary to extract sections 8(1) and 8(1-b) as they stood in the relevant year :(1) the tax admittedly payable shall be deposited within the time prescribed or by the thirty-first day of august, 1975, whichever is later, failing which simple interest at the rate of two per cent for every month or part thereof shall become due and be payable on the unpaid amount with effect from the day immediately following the last date prescribed or with effect from the first day of june, 1975, whichever is later and nothing contained in section 7 shall prevent or have the effect of postponing the liability to pay such interest.(1-b) if the tax assessed, reassessed or enhanced by any authority or court remains unpaid for three months after the expiry of the period specified in the notice of.....
Judgment:

C.S.P. Singh, J.

1. The petitioner was assessed to sales tax for the assessment year 1974-75 under the U. P. Sales Tax Act on 3rd October, 1978, and an amount of Rs. 88,116.52 was determined as tax payable by the Sales Tax Officer (5), Kanpur, by order dated 3rd October, 1978. Subsequent thereto the Sales Tax Officer took proceedings for imposition of interest under Section 8(1) of the Act. He found that an amount of Rs. 7,063.66 was deposited by the assessee on 18th September, 1978, and an amount of Rs. 17,254.92 was deposited on 23rd November, 1978. According to the Sales Tax Officer the last date for payment of the tax for the assessment year in question was 30th May, 1975, and as such the assessee was liable to pay interest as from 1st June, 1975, up to 30th September, 1978, at the rate of 3 per cent on the amount of Rs. 7,063.66 and at the same rate on Rs. 17,254.92 from 1st June, 1975, to 30th November, 1978. The total amount of interest payable by the assessee was worked out at Rs. 20,145.05. The assessee's contention that the tax had not been deposited as it was disputed, was not accepted, as the Sales Tax Officer found that the assessee had by an application dated 18th November, 1978, admitted the amount of assessed tax. The assessee in the present petition has challenged the vires of Section 8(1) of the Act. It is asserted that Section 8(1) offends article 14 of the Constitution, as it is in conflict with Section 8(1-B) of the Act, and discriminates against an assessee by depriving him of the extended period of limitation for paying the tax given by Section 8(1-B).

2. The vires of Section 9(1) was also challenged in the petition under article 19(1)(f) and article 31(1) of the Constitution, but no arguments in support of these grounds were addressed to us.

3. Thus we are left with the question as to whether Section 8(1) offends article 14 of the Constitution, in view of Section 8(1-B) of the Act. In order to consider this contention, it is necessary to extract Sections 8(1) and 8(1-B) as they stood in the relevant year :

(1) The tax admittedly payable shall be deposited within the time prescribed or by the thirty-first day of August, 1975, whichever is later, failing which simple interest at the rate of two per cent for every month or part thereof shall become due and be payable on the unpaid amount with effect from the day immediately following the last date prescribed or with effect from the first day of June, 1975, whichever is later and nothing contained in Section 7 shall prevent or have the effect of postponing the liability to pay such interest.

(1-B) If the tax assessed, reassessed or enhanced by any authority or court remains unpaid for three months after the expiry of the period specified in the notice of assessment and demand or from the date of the order of enhancement, as the case may be, simple interest on the unpaid amount shall become due and be payable as hereinafter specified-

(i) on the amount referred to in Sub-section (1), at the rate specified in that sub-section; and

(ii) on the amount, if any, in excess of that referred to in Sub-section (1), at the rate of one and one half per cent for every month or part thereof.

4. Before considering the arguments based on article 14 of the Constitution it will be necessary to appreciate the impact of Sections 8(1) and 8(1-B). Section 8(1) relates to a dealer who has admitted certain amount of tax payable by him on his turnover of sales or purchases as disclosed in his accounts or admitted by him in any return or proceeding under the Act, and if no accounts are maintained by him then according to the estimate of the dealer. Section 7 requires a dealer to submit returns at such intervals and in such form as may be prescribed. The rules prescribed the time for filing the returns and the form in which they have to be filed. Under Rule 41 prior to 1976, quarterly returns had to be filed. However, the rule was amended in 1976, and monthly returns have to be filed. Section 7(1-A) requires the dealer to deposit the tax due on the returned turnover. In case the tax is not deposited along with the return or before 31st August, 1975 (in cases relating to assessment years before 1975), simple interest at the rate of 2 per cent becomes due on the unpaid amount following the day on which the tax has to be deposited. We are unable to see any tinge of discrimination in cases to which Section 8(1) applies, as this provision applies uniformly to all dealers who have not paid the tax admittedly payable by them on the due date.

5. Now coming to Section 8(1-B). Under this provision when tax has been assessed or reassessed or enhanced by any authority, and it remains unpaid for a period of three months after the period of payment specified in the notice of assessment and demand, simple interest on the unpaid amount becomes due and payable on the amount referred to in Section 8(1) at the rate of 2 per cent and on the amount in excess of that which is referred to in Section 8(1), at the rate of 1 1/2 per cent. Thus, Section 8(1) applies to all dealers up to the time that the assessment is not made, while Section 8(1-B) applies after an assessment has been made. After an assessment has been made, Section 8(1-B) gives a respite of three months to the dealer, and after the expiry of this period of three months, simple interest at the rate of 2 per cent becomes due on the tax admitted by the dealer, and at the rate of If per cent on tax which is in excess of the amount admitted under Section 8(1). This view of ours regarding the scope of Section 8(1) and Section 8(1-B) is in consonance with the decision of a Division Bench of this Court in the case of Annapurna Biscuit Manufacturing Company v. State of U.P. 1980 UPTC 1320.

6. The counsel for the petitioner had urged that the respite given under Section 8(1-B) brings about a discrimination inasmuch as no similar respite is given to a dealer who has admitted the amount of tax payable by him. We are unable to appreciate this argument. Section 8(1-B) works to the advantage of a dealer after an assessment has been made, for it gives a respite of three months to every dealer including one who has admitted his tax liability. We are of the view that a charge of discrimination can be levelled only in case it works adversely against a person. It finds no quarter where the law grants a concession. Inasmuch as Section 8(1-B) confers an advantage by way of a respite regarding liability of interest no hostile discrimination results. The decisions in the case of Suraj Mall Mohta : [1954]26ITR1(SC) and in the case of Anandji Haridas and Co. (P.) Ltd. v. S. P. Kushare, Sales Tax Officer, Nagpur : [1968]1SCR661 are not in point, as in those cases the situation which prevails in the present case did not exist.

7. The petition fails, and is dismissed. There shall be no order as to costs. This order will govern Writ Petition No. 247 of 1980 (Tax), Writ Petition No. 19 of 1980, Writ Petition No. 67 of 1980, Writ Petition No. 213 of 1980 and Writ Petition No. 214 of 1980.


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