G.S. Singhvi, J.
1. In view of the identical issues raised in these Petitions, we are deciding them by a common order.
Brief statement of facts :
C.W.P. No. 2263 of 1989
Petitioner-M/s Mohta Electro Steel Limited, Bhiwani is a company engaged in the manufacture of stainless steel strips and Cold Rolled Annesling from S.S. Strips and small pieces of coils. It is registered as a dealer under the Haryana General Sales tax Act, 1973 (hereinafter referred to as 'the State Act' and also under the Central Sales tax Act, 1956 (for short, 'the Central Act')- The raw material is purchased by the petitioner No.1 from within the State of Haryana. It also imports some raw material from outside the State of Haryana. For the year 1983-84, the assessing authority initiated proceedings Under Section 28(2) of the State Act and passed order dated Sept. 30, 1987 whereby it levied purchase tax on the petitioner No. 1. After the expiry of about one year, the assessing authority issued notice dated 24.8.1988. Annexure P5 Under Section 41 of the State Act proposing review of the order dated 30.9.1987 by observing that the dealer had purchased consumable stores worth Rs. 19,52,946.52 but tax Under Section 9 in respect of the consumable stores used for the manufacturing of goods transferred had not been assessed and as the same was not deposited along with the returns, interest and penalty was also leviable. Another notice Under Section 41 of the State Act was issued to the petitioner on 14.10.1988. A notice dated 21.11.1988 was also issued by the revising authority Under Section 40 of the State Act proposing revision of the order of assessment dated 30.9.1987 in respect of the year 1983-84. The petitioner submitted a detailed reply and questioned the jurisdiction of the Deputy Excise and Taxation Commissioner to initiate action Under Sections 40 and 41 of the State Act. After hearing the representative of the petitioner No.1, the revising authority passed the order dated 3.1.1989 and assessed the tax Under Section 9 to the tune of Rs. 18,52,029.52. It also assessed the petitioner Under Section 24(3) of the State Act for a sum of Rs. 1,25,434.86. The revising authority levied interest upon the petitioner from May, 93 to September, 1987 and held that a sum of Rs. 1,87,072/- was payable in the form of interest Under Section 25(5) of the State Act.
2. In the writ petition, the petitioner has challenged the vires of Section 14 of the State Act, the amendments made in the State Act by the Haryana General sales Tax (Amendment and Validation) Act, 1990, as also the amendments made in the State Act by the Haryana Act No. 4 of 1991 on the ground that these provisions are violative of Articles 14, 19(1)(g), 300-A of the Constitution of India are also hit by the decision of the Supreme Court in Goodyear India Ltd. v. State of Haryana, 16 S.T.C. 71. The petitioners have also challenged the action of the revising authority to levy interest and penalty on the basis of the decision of the Supreme Court in Associated Cement Co. Ltd. v. C.T.O., 48 S.T.C. 446.
3. In the written statement filed by the respondents, levy of purchase tax has been justified on the basis of the decision of the Full Bench of this Court in Des Raj Pushap Kumar Gulati v. State of Haryana, 58 S.T.C. 393 and the amendments made by the Legislature after the decision of the Supreme Court in Goodyear India Ltd. v. State of Haryana (supra). The levy of interest and penalty has been supported on the basis of the judgments of the Supreme Court and other High Courts.
C.W.P. No. 15890 of 1989
This writ petition has been filed by M/s Mohta Electro Steel Limited against the order Annexure P8 passed by the revising authority Under Section 40(2) of the State Act whereby it revised the order dated 29.3.1985 passed by the assessing authority and levied tax Under Section 9 of the State Act and at the same time directed the assessee to pay interest Under Section 25(5) of the State Act for the period from May, 1981 to May, 1989. The total amount held payable by the assessee as per the order of the assessing authority comes to Rs. 2,34,937.43 (tax) Under Section 9 and Rs. 3,40,605/- as interest. It also directed the assessing authority to take penal action Under Section 47 and 50 read with Section 24(3) of the State Act. Aggrieved by the order of the assessing authority, the petitioner No.1 filed an appeal. It also applied to the Tribunal for exemption from payment of amount of tax and interest. However, the Tribunal directed the petitioner No.1 to deposit 20% of the tax as a condition precedent to the entertainability of the appeal.
C.W.P. No. 695 of 1988
Petitioner-M/s Frick India Limited is registered under the State Act as well as the Central Act. It was assessed for the year 1979-80 under the State Act and the tax demanded from it was to the tune of Rs. 2,35,416/-. The revising authority i.e. the Deputy Excise and Taxation Commissioner (Inspection), Faridabad initiated action Under Section 40(2) of the State Act and held that the petitioner was liable to pay purchase tax Under Section 9 of the State Act along with interest amounting to Rs. 75,982/-. Accordingly, the revising authority directed the realisation of the aforesaid amount of interest and for taking of action Under Section 47 of the State Act. The petitioner has challenged the levy of purchase tax and interest by contending that Section 9 is ultra vires the powers of the State Legislature.
4. During the course of hearing, learned counsel for the petitioners submitted that they do not want to press the challenge to the vires of Section 9 of the State Act and various amending Acts in view of the decisions of the Supreme in Hotel Balaji and Ors. v. State of Andhra Pradesh, 88 S.T.C. 98; Devi Dass Gopal Krishan Pvt. Ltd. v. State of Punjab, JT 1994(3) SC 239 and two decisions of this Court in United Rice Land Pvt. Ltd. v. State of Haryana, (1996-3)114 P.L.R. 227 and in C.W.P. No. 6646 of 1986 Good Year India Limited and Anr. v. State of Haryana and Anr., (1997-2)116 P.L.R. 252 decided on 11.12.1996. They, however, . argued that the levy of interest and initiating of action for penalty by the revising authority is uncalled for and unjustified. Learned counsel for the petitioners submitted that the decision of the Supreme Court in Associated Cement Co. Ltd. v. C.T.O. (supra) on the basis of which the revising authority levied interest on the petitioners can no longer be regarded as good law in view of the later decision of the Apex Court in J.K. Synthetics Ltd. v. C.T.O,, AIR 1994 SC 2293 ; (94 S.T.C. 422), and, therefore, the impugned orders should be declared illegal. They invited our intention to an order dated 26.8.1996 passed in C.W.P. No. 6683 of 1996, F.C.I. v. Stale of Haryana and Anr., to substantiate their plea that the State Government has conceded the legal position regarding levy of interest in the light of the later decision of the Supreme Court.
5. Shri H.S. Hooda, learned Advocate General, Haryana submitted that the decision of the Supreme Court in M/s J.K. Synthetics Ltd. (supra) cannot be applied for interpreting the provisions of Section 25 of the State Act. He submitted that in view of Section 25(3) read with Section 28 of the State Act, the revising authority has rightly held that the petitioners are liable to pay interest on the amount of tax which ought to have been paid Under Section 9 of the State Act. Shri Hooda also argued that the failure of the petitioners to submit correct returns and discharge their liability in terms of Section 9 made them liable to pay interest and further made them liable to penal action Under Section 47 of the State Act.
6. Chapter-V of the State Act contains provisions relating to returns, assessment, re-assessment and collection of taxes. Chapter-VII contains provisions relating of appeal, revision, review and refund, Chapter VIII contains provisions relating to offences and penalties and Chapter-IX incorporates miscellaneous provisions. Sections 25, 28, 47 and 59 which have been relied upon by the rival parties in support of their respective contentions are reproduced below for ready reference :-
"25. Submission of returns and payment of tax :-
(1) Tax payable under this Act shall be paid in the manner hereinafter provided at such intervals, as may be prescribed.
(2) Such dealer as may be required so to do by the assessing authority by notice served in the prescribed manner, and a dealer who has applied for the grant of registration certificate and no final decision in that behalf has been taken, and every registered dealer shall furnish such correct returns by such dates and to such authority as may be prescribed.
(3) Before any dealer as mentioned in Sub-section (2) furnishes the returns, he shall, in the prescribed manner, pay into a Government Treasury or the Reserve Bank of India or the State Bank of India the full amount of tax due from him under this Act according to such returns and shall furnish alongwith the returns receipt from such treasury or bank showing the payment of such amount :
Provided that every registered dealer who in the immediately preceding year paid aggregated tax exceeding rupees one lakh both under this Act and the Central Sales Tax Act, 1956, shall pay tax every month in the manner prescribed.
(4) If any dealer discovers any omission or other error in any return furnished by him, he may at any time before the date prescribed for the furnishing of the next return by him furnish a revised return, and if the revised return shows a greater amount of the tax to be due than was shown in the original return, it shall be accompanied by a receipt showing payment in the manner provided in Sub-section (3) of extra amount.
(5) If any dealer as mentioned in Sub-section (2) fails to pay the tax due as required by Sub-section (3), he shall be liable to pay in addition to the tax due simple interest on the amount due at one per centum per month from the date commencing with the date following the last date for the submission of the return under Sub-section (2) for a period of one month and at one and a half per centum per month thereafter during the period be continuous to make default in the payment :
Provided that where the amount of tax not paid as required under Sub-section (3) does not exceed five hundred rupees, the interest payable thereon shall not exceed the amount of the tax not so paid :
Provided further that for the purpose of calculation of interest, a period of fifteen days or more shall be deemed to be one month and the amount of fifty rupees or more shall be deemed to be one hundred rupees and a period of less that fifteen days and an amount of less than fifty rupees shall be ignored.
28. Assessment of registered dealer :-
(1) If the assessing authority is satisfied without requiring the presence of dealer or the production by him of any evidence that the returns furnished in respect of any period are correct and complete, he shall assess the amount of tax due from the dealer on the basis of such returns.
(2) If the assessing authority is not satisfied without requiring the presence of the dealer who furnished the returns or production of evidence that the returns furnished in respect of any period are correct and complete, he shall serve on such dealer a notice in the prescribed manner requiring him, on a date and at a place specified therein, either to attend in person or to produce or to cause to be produced any evidence on which dealer such may rely in support of such returns.
(3) On the day specified in the notice or as soon afterwards as may be, the assessing authority shall, after hearing such evidence as the dealer may produce and such other evidence as the assessing authority may require on specified points, assess the amount of tax due from the dealer.
(4) If a dealer, having furnished returns in respect of a period, fails to comply with the terms of a notice issued under Sub-section (2), the assessing authority shall within five years after the expiry of such period, proceed to assess to the best of his judgment the amount of the tax due from the dealer.
(5) If a dealer does not furnish returns in respect of any period by the prescribed date, the assessing authority shall within five years after the expiry of such period, after giving the dealer a reasonable opportunity of being heard, proceed to assess, to the best of his judgment, the amount of tax, if any, due from the dealer.
(6) Any assessment made under this section shall be without prejudice to any penalty imposed under this Act.
(7) A dealer who, after grant of registration certificate, is assessed to tax from the date of his registration certificate is made operative, shall, on production of the due proof regarding payment of tax to a registered dealer from whom he had made purchases of goods during the period his application for the grant of registration certificate remained under consideration of the assessing authority and the delay in the disposal of such application is not wholly attributable to him and who is authorised by his registration certificate to make purchases of such goods without payment of tax to the selling registered dealer, be entitled to get the amount of sales tax so paid to be adjusted against his liability to pay tax.
47. Failure to pay the tax due according to the return. If any dealer fails to pay tax due as required by Sub-section (3) of Section 25, the Commissioner or any other person appointed to assist him under Sub-section (1) of Section 3 may, after affording to the dealer a reasonable opportunity of being heard, impose a penalty not exceeding one and half times the amount of tax to which he is assessed or is liable to be assessed Under Section 28.
59. Interest on failure to pay tax or penalty :-
(1) If the amount specified in any notice of demand, whether as tax or penalty, is not paid within the period specified in such notice, or in the absence of such specification, within thirty days from the date of service of such notice, the dealer shall be liable to pay simple interest on such amount at one percentum per month from the date commencing after the end of the said period for a period of one month and if the default continues thereafter at one and a half per centum per month for the whole of the period he continues to make default in the payment or a sum of ten rupees, whichever is greater:
Provided that where the recovery of any tax or penalty is stayed by the appellate authority under Sub-section (6) of Section 39 or by the High Court or the Supreme Court, the amount of such tax or penalty shall be recoverable with interest at the rate mentioned above on the amount ultimately found due, and such interest shall be payable on such amount from the date the tax or penalty first became due,
Provided further that where the amount of tax or penalty, not paid or paid less, does not exceed five hundred rupees; the interest payable thereon shall not exceed the amount of tax or penalty not so paid or paid less subject to the minimum of ten rupees;
Provided further that for the purposes of calculation of interest, a period of fifteen days or more shall be deemed to be one month and an amount of fifty rupees or more shall be deemed to be one hundred rupees and a period of less than fifteen days and an amount of less than fifty rupees shall be ignored.
(2) The interest payable under this section shall be deemed to be tax under this Act for purposes of collection and recovery."
7. Section 25(3) imposes a duty on every dealer to pay full amount of tax due from him under the provisions of the State Act according to the returns which such dealer is required to file Under Section 25(2). The payment of tax must precede the furnishing of the returns. Proviso incorporated in Section 25(3) requires the payment of tax every month by every registered dealer who in the immediately preceding year paid aggregate tax exceeding rupees one lakh both under the State Act and the Central Act. Section 25(4) gives liberty to the dealer to furnish revised return before the date prescribed for the furnishing of the next return and if the revised return shows a greater amount of the tax to be due than was shown in the original return, then the dealer must pay the extra amount before filing of the revised return. Section 25(5) makes a dealer liable to pay simple interest on the amount of tax due at the rate of one per centum per month in case the dealer fails to pay tax due Under Section 25(3). Section 28 provides for assessment of a registered dealer. Under Sub-section (1), the assessing authority is required to assess the amount of tax due from the dealer in case it feels satisfied that the returns furnished in respect of a particular period are correct and complete. In case the assessing authority is not satisfied with the returns furnished by the assessee then a notice is required to be given to the assessee requiring the assessee to attend in person or to produce evidence on which such dealer may rely in support of the returns. After hearing the dealer concerned, the assessing authority is required to assess the amount of tax due from the dealer. Sub-sections (4) and (5) deal with the best judgment assessment in case the dealer fails to comply with the notice issued Under Section 28(2) and in case the dealer fails to furnish return of any period. Sub-section (6) of Section 28 declares that any assessment made under that section shall be without prejudice to any penalty imposed under the Act. Sub Section (7) of Section 28 provides for adjustment of tax which a dealer is not liable to pay. Section 28-A provides for dispensing with the issuance of second notice in respect of the cases relating to the assessment for the period prior to 4.7.1979. Section 25-B empowers the assessing authority to make provisional assessment and Section 25-C provides for summary assessment in the case of a dealer whose gross annual turn-over exceeds Rs. five lacs both under the State Act and the Central Act. Section 46 provides for imposition of penalty upon a dealer who fails to comply with Section 25(2) without sufficient cause. Section 47 provides for imposition of penalty upon a dealer who fails to pay tax due in terms of Section 25(3). In either of these cases a notice is required to be given to the dealer before an order imposing penalty can be passed. Section 48 provides for imposition of penalty upon a dealer who has maintained files or incorrect accounts or documents with a view to suppress or conceal particulars of his sales or purchases or has furnished files or incorrect accounts, return, documents or information. Notice is also required to be given to the dealer before an order Under Section 48 is passed. Section 59 speaks of levy or interest if the amount of tax or penalty specified in any notice or demand is not made within the time specified in such notice or within 30 days after the service of the notice, where no time is specified. The amount of interest at the enhanced rate is payable in case the assessee persists with the default in making the payment. First proviso of Section 59(1) provides for payment of interest in case where the tax or penalty remains stayed due to an order passed by the appellate authority or the High Court or the Supreme Court.
8. In Associated Cement Co. Ltd. v. C.T.O. (supra), the Apex Court held that the assessee is liable to pay interest from the date of filing of the return. This decision came to be questioned before a Constitution Bench in J.K. Synthetics Ltd. v. C.T.O. (supra). In that case, the assessee had filed returns claiming that freight charges in respect of the sales of cement did not form part of the sale price for the purpose of payment of sales tax. That plea was ultimately rejected by the Supreme Court in Hindustan Sugar Mills v. State of Rajasthan, AIR 1978 SC 1416. By the same very decision the appeal of the assessee had also been dismissed by the Supreme Court. The Supreme Court held that the freight element formed part of the price of the cement and the sales tax was leviable on the sale price inclusive of the freight amount. The assessing authority levied interest on the amount of freight charges which had not been paid by the assessee by contending that the interest can be charged only for the period subsequent to the determination of the sales tax under final assessment and that too after the expiry of the period allowed by the notice of demand issued for finalisation of the assessment. The Revenue relied on the earlier judgment of the Supreme Court in Associated Cement Co. Ltd.' case (supra) in support of its plea that the interest was payable from the date on which the original return was filed.
9. The Constitution Bench overruled the majority decision in the Associated Cement Co. Ltd.'s case (supra) and approved the minority view expressed by Bhagwati, J. While taking this view, the Supreme Court interpreted the provisions of Sections 7(2), (2-A) and 11-B of the Rajasthan Sales Tax Act and observed :-
"Sub-sections (2) and (2-A) of Section 7 as they stood before their amendment by Rajasthan Act 4 of 1979, read as under :-
(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 Government Treasury or Bank concerned.
(2-A). 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.'
In Sub-section (2-A), by Amending Act 4 of 1979, the word 'tax according to his accounts' were substituted for the words 'proportionate tax on the basis of the last return' and the latter part of the sub-section was restructured by deleting the words 'The difference, if any, of the tax payable according to the return and the advance tax paid shall be deposited with the return' and making the sentence a running one. Sub-section (3) permits a dealer who discovers any error or omission in his return to submit a revised return in the prescribed manner before the time prescribed for the submission of the next return but not later.
Now Section 7(2) says that every 'such return, meaning thereby the return referred to in Section 7(1), shall be accompanied by a receipt showing the deposit of the full amount of tax due 'on the basis of the return'. In other words the dealer is required to pay the full amount of tax that becomes due on the basis of the particulars in regard to the turnover and taxable turnover disclosed in the return. Sub-section (2-A) begins with non obstante clause, namely, notwithstanding anything contained in Sub-section (2), and provides that any dealer or class or dealers specified in the notification may pay the tax at intervals shorter than those prescribed under Sub-section (1), in which case the tax shall be deposited at the intervals specified in the notification in advance of the return and the return shall be accompanied by the receipt for the full amount of tax due 'shown in the return'. . Although the phraseology used in Sub-sections (2) and (2A) of Section 7 is not the same, the content and purport of the two sub-sections is more or less identical, namely, both the sub-sections require that the return shall be accompanied by a receipt evidencing the deposit of the 'full amount of tax due' on the basis of the return or on the basis of the information shown in the return. The full amount of tax due and payable prior to the submission of the return is clearly relatable to the information furnished in the return. Undoubtedly, the information to be furnished in the return must be 'correct and complete', that is, true and complete to the best of knowledge and belief ; without the dealer being guilty of wilful omission. This is the essence of the verification clause found at the foot of Form ST-5. Therefore, on a conjoint reading of Section 7(1), (2) and (2A), Rule 25, the information to be furnished under Form ST-5 and the form of verification, it becomes clear that the dealer must deposit the full amount of tax due on the basis of information furnished, which information must be correct and complete to the best of the dealer's knowledge and belief without he being guilty of wilful omission. If the dealer has furnished full particulars in respect of his business, without wilfully omitting or withholding any particular information which has a bearing on the assessment of tax, which the honestly believes to be 'correct and complete', it would be difficult to hold that the dealer had not acted 'bona fide' in depositing the tax due on that information before the submission of the return. Of course the tax so deposited is to be deemed to be provisional and subject to necessary adjustment in pursuance of the final assessment. Section 7AA empowers levy of penalty if the assessing authority is satisfied that any dealer has 'without reasonable cause' failed to furnish the return Under Section 7(1) within the time allowed. The use of the words 'without reasonable cause' clearly implies that if the dealer can show reasonable cause for his lapse he cannot be visited with the penalty prescribed by Section 7AA. To put it differently if reasonable cause is shown by the dealer for the lapse, he cannot be visited with penalty under this provision. This is also suggestive of the fact that the legislature desired to be harsh with wilful defaulters or those guilty of wilful omission of material information under the 'bona fide' belief that the same was not necessary or those who has failed to pay the full tax due not with a view to evading or avoiding the liability to pay the tax but because they bona fide believed that they were liable to pay the tax assessed by them on the basis of the return and no more. If at a later date on the basis of a different interpretation put on the language of the relevant provisions of the law, the dealer becomes liable to pay tax in excess of that already paid, he may be called upon to make good the difference but he cannot be visited with penalty Under Section 7AA unless it is shown that the dealer had withheld payment of the differential tax by wilfully withholding material information or had acted without reasonable cause in committing the default.......................... Section 11-B then provided that if the amount of any tax payable under Sub-sections (2) and (2A) of Section 7AA is not paid within the time allowed or if the tax amount specified in any notice of demand is not paid within the period specified, the dealer shall be liable to pay simple interest on such amount at one per cent per month for a period of three months and thereafter at one and a half per cent per month during the time he continues to make default in the payments. However, according to Section 11B substituted by Act 4 of 1979 w.e.f. 7th April, 1979, the liability to pay interest accrues (a) where the dealer has furnished returns but has failed to pay the tax as per the said returns or within the time allowed; (b) where a dealer has furnished a revised return Under Section 7(3) whereunder the amount of tax payable is larger than that already paid; (c) where a dealer had filed his return after expiry of the prescribed period but has not paid the tax as per return or within the lime allowed; (d) where a dealer is required to pay tax without furnishing a return for any period and such tax is not paid in full by the due date; (e) where a dealer required to furnish returns pays tax for any period without furnishing returns; and (f) where the liability to pay tax is quantified in respect of a dealer who had submitted returns for the period of which the tax is quantified. It will thus be seen that Under Section 11-B before the 1979 amendment the liability to pay interest on unpaid tax amount accrued on the dealer in two situations only, viz., (i) failure to pay the tax due under Sub-sections (2) and (2A) of Section 7 and (ii) failure to pay the tax within the time allowed by the notice of demand or thirty days from the receipt of the notice by the dealer. Section 11-B before its amendment nowhere provided for payment of interest on the unpaid tax amount as found on final assessment from the date of the filing of the return Under Section 7 of the Act. If the amount of tax payable under Sub-section (2) is paid on the basis of return, not on the basis of final assessment, there can be no question on payment of interest under Clause (a) of Section 11-B. Similarly, if the tax is paid according to the return as required by Sub-section (2A), in other words, if the full amount of tax due 'shown' in the return is paid, there can be no question of charging interest under Clause (a) of Section 11B. So far as Clause (b) is concerned it is a post-assessment situation. Where tax is found due on the final assessment and the dealer is required to make good the difference, a notice of demand will issue. If the dealer fails to pay the tax within the time specified in the notice, and if no time is specified within 30 days from the receipt of the notice, he is required to pay interest at the rates prescribed by the Sub--section. But if he pays the difference of tax within the prescribed time, there is no question of charging interest. If such an interpretation is not placed and if the Revenue's plea is accepted serious anomalies would surface. Firstly, if the liability to pay interest on the balance tax amount accrues from the date of submission of returns Under Section 7, Clause (b) of Section 11B read with Section 11(2) would be rendered nugatory. Otherwise one would be required to hold that interest would be payable from the date of submission of the return till the date of issuance of notice of demand and thereafter no interest would have to be paid till the expiry of the specified period or thirty days, as the case may be, and thereafter interest would have to be paid at a given rate for the first three months and thereafter a higher rate. Such could not be the legislative intent. Secondly, take the case of a dealer who had failed 'o submit a return and is subjected to assessment of tax on the basis of best judgment. Pursuant to the said assessment he deposit the tax. Such a dealer would not be liable to pay interest on the on the balance tax if the tax assessed Under Section 10 is higher than what was provisionally assessed. He can always claim that he cannot be made liable to pay interest for the error of the authority in making the provisional assessment Under Section 7A. The defaulter would be in a better position than a dealer who complies with the requirement of Section 7(1). And if he can show reasonable cause, he would also escape the penalty clause in Section 7AA and 16(1). More or less a similar situation may arise in the matter of payment of interest where provisional assessment is made under Section 7B. Of course such a dealer may become liable to penalty but that is a different matter altogether. Take also the case of a dealer who submits a return without depositing the tax on the basis thereof. Under Rule 25(4) the authority may or may not take cognizance of the return. If cognizance is not taken the dealer would be treated on par with one who has not submitted a return but if cognizance is taken he must be treated as one who is liable to pay interest under Clause (a) of Section 11B of the Act. Therefore, the view canvassed by the Revenue heads to incongruous situations which can never be the legislative intent................."
10. We may also refer to the decision of the Constitution Bench of the Supreme Court if Frick India Ltd. v. State of Haryana, 95 S.T.C. 188 in which the Apex Court applied the ratio of the decision in J.K. Synthetics Ltd. v. C.T.O. (supra) and held that the amount of interest levied and collected from the petitioner under the State Act as well as the central Act shall be refunded to it.
11. Section 7(2) of the Rajasthan Act is pari materia with Section 25(3), Section 11(b) of the Rajasthan Act is pari materia with the substantive part of Section 59 of the State Act. Section 11-B(a) of the Rajasthan Act is substantially similar to Section 25(5) of the State Act. Therefore, the law laid down in J.K. Synthetics Ltd. v. C.T.O. (supra) deserves to be followed for interpreting the provisions of Sections 25, 47 and 59 of the State Act and in our opinion, there is no reason to accept the submission of Shri Hooda that the ratio of the decision of the Constitution Bench in J.K. Synthetics Ltd. v. C.T.O. (supra) should not be applied for interpreting the provisions of the State Act.
12. In C.W.P. No. 2263 of 1989, the assessing authority had accepted the return filed by the assessee and held that a sum of Rs. 13,74,576/- was payable as tax under the State Act and as the tax already paid amounted to Rs. 16,21,275/-, a sum of Rs. 2,46,699/- was refundable to the dealer on application. In arriving at this conclusion the assessing authority determined purchase value of the goods at Rs. 3,41,00,000/-approximately for the purpose of levy of tax Under Section
9. For the purpose of Central Act, the assessing authority issued demand notice of Rs. 1142/-. The revising authority did not agree with the assessing authority. It held that the order passed by the assessing authority was improper and illegal. It created an additional demand of Rs. 18,52,029.52 Under Section 9 and Rs. 1,25,434.86 Under Section 24(3). At the same time, it levied interest amounting to Rs. 1,87,072/- Under Section 25(5) of the State Act. This order was made by the revising authority on 3.1.1989.
13. The order which is under challenge in C.W.P. No. 15890 of 1989 was passed by the revising authority on 31.5.1989 whereby the revising authority set aside the order of the assessing authority passed on 29.3.1985 and held that the assessee was liable to pay an additional tax amounting to Rs. 2,28,396.35 Under Section 9. It also held that the assessee was liable to pay an additional tax of Rs. 3389/- under the State Act in respect of the goods returned from the purchasers. A sum of Rs. 3151.80 was held payable Under Section 24(3) of the State Act. The revising authority also levied interest amounting to Rs. 3,40,605/-.
14. In these orders, there is no indication that the assessee had made wilful concealment of the income or had furnished false or incorrect information to the department regarding the raw material purchased by it. In the absence of any such finding and also in the absence of any indication in the impugned orders that the assess did not deposit the tax as required by Section 25(3) on the returns furnished i Under Section 25(2), levy of interest from a date earlier than the order passed by the revising authority cannot be held legal and cannot be sustained. Similar levy of interest in the case of M/s Frick India Ltd. (CWP No. 695 of 1988) is unsustainable. The interest, if any, in respect of the unpaid amount of tax can be levied from the date of demand and not from an earlier date.
15. For the reasons stated above, the writ petitions arc partly allowed. The orders passed by the revising authority levying interests and penalty on the petitioners are quashed. It is, however, made clear that the petitioners shall be liable to pay interest from the date of demand in respect of the unpaid amount of tax. The concerned . authorities shall be free to take proceedings under the State Act for realisation of the amount of interest, if any, found due from the petitioners in the light of this order. The prayer of the petitioners for striking down the provisions of the State Act ' is rejected.