JUDGMENT
L.N. Ray, Judicial Member.
1. In this application under Section 8 of the West Bengal Taxation Tribunal Act, 1987, the applicant-company challenges the demand of interest on turnover tax for late payment of the same under the Bengal Finance (Sales Tax) Act, 1941 and the West Bengal Sales Tax Act, 1954.
2. In brief, the case of the applicant company is that it carries on the business of manufacture and sale of various fibres, insulators, etc., in its several units located in West Bengal. It is a registered dealer under the said 1941 Act and the 1954 Act. Section 6B was inserted in the 1941 Act and Section 4AAA was inserted in the 1954 Act by the West Bengal Taxation Laws (Second Amendment) Act, 1979, with effect from April 1, 1979, introducing turnover tax. Similarly, Sections 10A and 8A were inserted in the 1941 Act and the 1954 Act respectively with effect from October 1, 1983, introducing interest. The company’s aggregate gross turnover for the year ending March 31, 1979, exceeded Rs. 50,00,000 and as such, the company became liable to pay turnover tax in terms of Section 6B of the 1941 Act and Section 4AAA of the 1954 Act as soon as those provisions came into force. The company moved an application [C.R. 5416(W) of 1982] under Article 226 of the Constitution of India in the High Court at Calcutta, challenging the constitutional validity of the aforesaid provisions relating to imposition of turnover tax. On April 12, 1982, the learned single Judge of the High Court passed an order restraining the respondents from giving any effect to those provisions till disposal of the writ application, on condition of depositing 50 per cent of the impugned tax in a separate account not to be operated by the applicant. That order was modified subsequently to the effect that the company could furnish bank guarantee instead of depositing the money in a separate account. A number of other dealers also moved the High Court under Article 226 challenging the constitutionality of imposition of turnover tax. Many of those writ petitions were dismissed by the High Court. Thereupon, appeals were preferred before a Division Bench. Some of those appeals were dismissed by the Division Bench of the High Court by a judgment dated February 24, 1988 Century Spinning Mfg. Co. v. State of West Bengal [1989] 73 STC 277 (Cal). The applicant-company’s writ application was, however, dismissed for default on or about September 25, 1985. On March 25, 1988, the order of dismissal for default was recalled upon an application for restoration, and at the same time, the writ petition was also dismissed by the learned single Judge of the High Court by directing the applicant to pay Rs. 5 lacs within March 31, 1988 and to go on paying the balance of about Rs. 33 lacs at Rs. 5 lacs per month till the entire sum was liquidated. The first instalment was to be paid within April 31, 1988. Subsequently, it transpired on calculation that the correct amount of dues of turnover tax was Rs. 35,90,028. An application was, therefore, made in the High Court for modification of the order dated March 25, 1988. That application is still pending.
3. The further case of the applicant is that the company also paid a sum of Rs. 2,88,124 as interest on turnover tax for the periods 1985-86, 1986-87 and 1987-88. Demands of outstanding interest in respect of the periods from 1983-84 to 1984-85 are claimed to be amounting to Rs. 4,03,666 under both the Acts. On the date of moving the writ application in the High Court, the company had already paid turnover tax amounting to Rs. 7,67,105.60 from April, 1979 up to January, 1982. Thereafter the company did not pay any further turnover tax between February, 1982 and February, 1988. But it is claimed, it has paid off all dues and arrears of turnover tax as on date of filing the present application. It has also paid off the entire sum in terms of the order of the High Court dated September 25, 1985. The applicant admits that the turnover tax which fell in arrear during the pendency of the writ application in the High Court was paid up beyond the time stipulated by the statute for such payments, although such turnover tax was disclosed in the returns filed for the relevant periods. Thereafter the company received notices for demand of interest in respect of the periods from July, 1983 to June, 1986 (3 years). The authorities thereupon passed orders determining the alleged interest payable by the company. The applicant-company claims that the provisions as to interest, viz., Section 10A(1) of the 1941 Act and Section 8A(1) of the 1954 Act can have no application to its case and it has no liability under those provisions for the reason that returns were filed duly and the entire amount of payable turnover tax was paid. Similarly, Sub-section (2) of those provisions should not apply to the applicant, as there was no failure to submit return. Sub-section (3) will also not apply to the case of the applicant. The applicant could not pay the turnover tax within the prescribed time, since the writ petition challenging imposition of the tax was pending in the High Court and since it was protected by an interim order of the High Court. It, therefore, cannot be saddled with interest on the principle that no one should suffer any prejudice having acted on the court’s order. Moreover, the High Court had permitted the applicant to make payment of the turnover tax in instalments specified by the court. Thus, the tax was paid in accordance with the High Court’s order. On these grounds, the applicant-company prays for quashing the notices and the orders of determination of interest and demand thereof.
4. The respondents have opposed the application. Their case in the affidavit-in-opposition is that, like many other dealers, the applicant challenged the validity of the turnover tax introduced by the West Bengal Taxation Laws (Second Amendment) Act, 1979, by a writ petition in the High Court. There were interim orders in those writ petitions directing that the respondents should not give effect to the disputed provisions. Finally, the High Court upheld the validity of imposition of turnover tax. Now, the applicant does not dispute the validity of turnover tax, but is objecting to the demand of interest on the amount of turnover tax paid beyond the prescribed time on the ground that the delay had occurred in view of the interim order of the High Court. According to the respondents, once a final order is passed by the court, the interim order loses its effect and since the validity of the legislation was upheld, it took effect from the inception. The said order is naturally contingent upon the final order. It is also said that a litigant starts litigation at his own risk and peril. In the event of an adverse result, the litigant must be visited upon by the effect thereof. It is further contended that the interim order was only binding upon the respondents with regard to levy and collection of turnover tax from the applicant. But there was no restriction upon the applicant regarding payment of the tax on its own. The final order passed by the High Court in the applicant’s writ petition did not indicate that interest was not required to be paid. By merely paying the amount of turnover tax in accordance with the order of the High Court, the applicant did not fully discharge its statutory liability, since the amount of interest payable in accordance with law had not been paid. As regards filing of returns, the case of the respondents is that to make a return correct, the dealer should show the quantum of turnover on which turnover tax is payable and also calculate the amount of turnover tax payable thereon. Allegedly, the applicant did not file returns in the appropriate manner. For example, in the returns for the years ending June 30, 1984 and June 30, 1985, the applicant showed only the turnover without computing the turnover tax and without stating the reason for non-payment of turnover tax. A demand for Rs. 1,60,648 on account of unpaid interest for a single year was made but the applicant has not yet paid the sum. As regards return under the 1954 Act, in the return for the month ending June 30, 1984, the turnover tax was computed but the reason for non-payment of tax was not stated and challan showing the payment of the tax was not enclosed. In the returns for the months of May and June, 1985 and for the years 1985 and 1986, similarly, no reason was given as to why the tax was not paid. Thus, returns were not submitted always in a correct and complete manner. It is also the case of the respondents that apart from the aforesaid defects in some of the returns, all the returns filed by the applicant were neither true nor correct, because those were not accompanied by treasury challans evidencing payment of the entire amount of the turnover tax computed therein. The provisions of law as to interest came into play and the interest actually accrued, when the turnover tax was not paid by the applicant within the time fixed by the statute. Interest has been demanded from the applicant only from the date from which the provisions of law as to interest came into force. Neither the interim order nor the final order under which the arrear turnover tax was paid, provides any protection to the applicant against or exonerate the applicant from, the liability of paying either the principal amount of turnover tax or the amount of interest thereon.
5. The applicant filed an affidavit-in-reply in which it said that the respondents had misconstrued the scope and effect of the interim order of the High Court passed in C.R. 5416(W) of 1982. The applicant stated that the decision of this Tribunal relating to interpretation of Section 10A of the 1941 Act will be referred to at the time of hearing. It has claimed that the returns filed by the applicant during the impugned periods under the 1941 Act as well as the 1954 Act were in accordance with the principles laid down by this Tribunal in the cases of Kingsway & Co. [1990] 76 STC 119 and M.L Shroff & Co. [1991] 80 STC 65, by disclosing all the relevant particulars relating to turnover tax and also the reason for non-payment thereof. According to the applicant, 39 Nos. of returns were filed under the two Acts during the periods in question. Out of those returns, in only a few of them, the amount of turnover tax and the reason for non-payment, were inadvertently not stated, but in the rest all the particulars were given. The example given by the respondents, viz., the return for the year ending June 30, 1984 (not April 30, 1984) under the 1941 Act, was correct in all respects.
6. There is no doubt that the turnover tax for the disputed years 1983-84, 1984-85 and 1985-86 was not paid by the applicant within due time. It may be noted that Section 10A of the 1941 Act and Section 8A of the 1954 Act are pari materia and both the provisions came into force with effect from October 1, 1983. Sub-sections (1), (2) and (3) of those two sections contemplate similar situations. The primary condition precedent of applicability of those two provisions as to interest is non-payment of full amount of payable tax within the prescribed date. Non-payment may be either upon self-assessment, i.e., before filing of return, such cases being governed by Sub-sections (1) and (2), or upon assessment by the taxing authority, such cases being governed by Sub-section (3). The next condition precedent is, in a case governed by Sub-section (1), that the return must have been filed ; in a case governed by Sub-section (2), that the return is not filed ; and in a case governed by Sub-section (3), that the assessment has been made by the taxing authority. But as already stated, the common and basic condition which must be satisfied in each case before the liability of paying interest can arise is that the full amount of payable tax must not have been paid by the prescribed date.
7. Parties have relied on the decisions of this Tribunal in the cases of Kingsway & Co. [1990] 76 STC 119 and M.L. Shroff & Co. [1991] 80 STC 65, to which two of us were parties. However, each case is decided and observations in each case are made in the context of the facts and circumstances of that case. Some observations may appear to be in the nature of general application, but those should also be considered in the context of the facts and circumstances obtaining in that particular case. Naturally, the court keeps in view the particular facts of each case, while deciding it or making any observation in the judgment. Therefore, the ratio decidendi of a decided case is to be considered in that perspective. In Kingsway & Co. [1990] 76 STC 119, it was decided by this Tribunal that the case was covered by either of the Sub-sections (1) and (2) of Section 10A of the 1941 Act. The main point for consideration was whether any return about turnover tax had been filed or not in that case. But, in the case of M.L. Shroff & Co. [1991] 80 STC 65 (WBTT), the facts and the points involved were entirely different from those of the case of Kingsway & Co. [1990] 76 STC 119 (WBTT). There filing of returns and payment of tax according to the returns were in compliance of and under the direction of the court’s interim order. The liability to pay the tax was also for a certain period rendered ineffective, because the learned single Judge had. allowed the writ petition of the company challenging the notification dated April 1, 1975, regarding levy of tax on sales of carpets. Previously, sales of carpets were exempted under Rule 3(28) of the Bengal Sales Tax Rules, 1941. That writ petition was allowed declaring the notification ultra vires by a judgment in the month of November, 1979. The Revenue appealed to the Division Bench of the High Court which passed interim orders directing the sales tax authorities to complete the assessments but not to give effect to them. In March, 1987, the appeal was disposed of, setting aside the decision of the learned single Judge, by granting only partial relief to the applicant. Thereafter, assessment for the year 1983-84 was completed. Thus, when the impugned returns were filed by the applicant, the notification dated April 1, 1975, stood quashed and the appeal was pending. The applicant, M.L. Shroff & Co. had obtained an interim order permitting it to submit the returns claiming exemption from payment of tax on woollen carpets. In that context, the case of M.L. Shroff & Co. [1991] 80 STC 65 (WBTT) was decided. It was held that the case was distinguishable from the case decided in [1990] 76 STC 119 (WBTT) (Kingsway & Co. v. Commercial Tax Officer) and that interest could not be charged under Section 10A of the 1941 Act.
8. In the case of Kingsway & Co. [1990] 76 STC 119 (WBTT) the applicants filed a writ petition challenging the validity of levy of turnover tax under the 1941 Act. The petition was dismissed by the trial court. Upon appeal, a Division Bench by a judgment dated February 24, 1988 Century Spinning Mfg. Co. v. State of West Bengal [1989] 73 STC 277 (Cal), declared the levy to be valid and dismissed the appeal. Thereafter, the same applicants filed another writ petition challenging their liability to pay interest on turnover tax under Section 10A of the 1941 Act and contended that by virtue of the stay granted by the High Court in the earlier writ petition, no interest could be demanded from them prior to February 24, 1988. They contended that they had filed returns and paid tax according to the returns and, therefore, they could not be held liable for interest on turnover tax under either Sub-section (1) or (2) of Section 10A. In any case, Section 10A(3) did not apply. It was held by this Tribunal in the judgment reported in [1990] 76 STC 119 (Kingsway & Co. v. Commercial Tax Officer) that the return envisaged under Section 10A is a full and complete return in all respects, and that the applicants did not submit complete returns for turnover tax. It was held, therefore, that if return is deemed to have been filed, then the applicants are liable under Section 10A(1). It was, however, held that since no complete return was filed regarding turnover tax and no turnover tax was also paid, the applicants were liable to pay interest under Section 10A(2). In the present case, the applicant-company, like many others, filed a writ petition challenging the validity of imposition of turnover tax. The petition was once dismissed for default, then it was restored upon application and on the same day, namely, on March 25, 1988, the writ petition was disposed of, directing the applicant-company to pay Rs. 5,00,000 within March 30, 1988 and to pay the balance amount of Rs. 33,00,000 at Rs. 5,00,000 per month till the entire sum was liquidated. Thereafter, the company paid up the same amounts as directed by the High Court. In this case, returns for the disputed periods were filed, but Dr. Samir Chakraborty, learned advocate for the applicant, submitted that such returns may be divided into two classes. One class consists of the returns where turnover was stated, payable turnover tax was mentioned and the reason for non-payment, being the interim order, was also stated. The interim order was to the effect that the respondents, i.e., the taxing authorities should not give effect to those provisions and should not levy or collect turnover tax from the applicants till disposal of the writ petition. Dr. Chakraborty submitted that the other class consists of the returns in which turnover was stated, turnover tax was mentioned, but the reason for non-payment of turnover tax was not stated. In other words, in the second class of returns, it was not stated that turnover tax was not paid due to the interim order of the High Court. Thus, what is very clear is that the present case is altogether different from the case of M.L. Shroff & Co, [1991] 80 STC 65 (WBTT) the ratio of which cannot be applied here.
9. Learned advocate for the applicant submitted that in the present case, returns, i.e., full and complete returns, were duly filed and tax, in accordance with the returns, had been paid within due time because turnover and payable turnover tax were shown in the returns and in many of the returns, the reason for non-payment of turnover tax was stated. According to him, therefore, at least those returns in which turnover and payable turnover tax were shown and the reason for non-payment of turnover tax was mentioned, should be regarded as full and complete returns, as envisaged in Sub-sections (1) and (2) of Section 10A of the 1941 Act and Section 8A of the 1954 Act. He particularly relied on the following observation appearing in paragraph 19 of the judgment of this Tribunal in [1990] 76 STC 119 (Kingsway & Co. v. Commercial Tax Officer) at page 129 :
“The injunction could not prevent the applicants from furnishing returns in respect of taxable turnover and then claiming exemption from payment of the same in view of the interim order of injunction. That does not appear to have been done.”
Dr. Chakraborty, learned advocate for the applicant, contended on the basis of the above observation that return was furnished in respect of taxable turnover in the present case and exemption was also claimed in most of the returns in view of the interim order. Therefore, he further contended that the liability to pay interest did not arise in respect of the applicant so long the interim order was in force. It may be noted that the writ petition having been dismissed for default on September 25, 1985 and having been restored to file and also disposed of on March 25, 1988, even the interim order stood vacated as on March 25, 1988, the date of final order and also during the intervening period from September 25, 1985 to March 25, 1988. Dr. Chakraborty’s another contention is that the arrears of turnover tax were paid in terms of the order dated March 25, 1988, passed by the High Court. That being so, the question of liability to pay interest on the arrear tax does not arise.
10. Mr. P.K. Chakraborty, learned State Representative, relied on [1990] 76 STC 119 (WBTT) (Kingsway & Co. v. Commercial Tax Officer) and contended that the interim order of injunction dated April 12, 1982, obtained by the applicant from High Court in C.R. 5416(W) of 1982 did not prevent the applicant from paying turnover tax or prevent accrual of interest on unpaid tax in accordance with law. It was held in Kingsway & Co. [1990] 76 STC 119 (WBTT) that with the dismissal of the appeal by the High Court, the prohibition against collection of tax stood vacated. The liability was always there and it was not created by the judgment of the appeal court. The judgment merely declared the liability. Therefore, it was held that the liability to pay turnover tax accrued not from the date of judgment of the appeal court but from the moment the provision as to turnover tax was statutorily given effect to. We are of the opinion that the interim order obtained by the applicant in this case did not prevent it from paying turnover tax. interest on tax unpaid within the stipulated date, runs according to the statute, namely, under Section 10A of the 1941 Act and under Section 8A of the 1954 Act, It was held in the case of Kingsway & Co. [1990] 76 STC 119 (WBTT) that the running of time for payment of interest cannot be stopped because of interim order. These points were concluded, as far as this Tribunal is concerned, in the case of Kingsway & Co. [1990] 76 STC 119 (WBTT).
11. Both the parties have relied on the decision in [1990] 7.6 STC 119 (WBTT) (Kingsway & Co. v. Commercial Tax Officer), We have already noticed that in the present case, there are two classes of returns filed by -the applicant during the impugned periods. In that class of returns, where taxable turnover and payable turnover tax were stated, but the reason for non-payment of turnover tax was not mentioned, in the particular part of return meant for turnover tax, it may not be said that a complete return was filed. That being so, these returns are governed by Sub-section (2) of Section 10A of the 1941 Act and Section 8A of the 1954 Act, as the case may be. If, however, even without mention of the reason for non-payment of tax, these returns are assumed to be complete returns, then these will be governed by Sub-section (1). The other class comprises the returns where taxable turnover and payable turnover tax and the reason for nonpayment of the tax were stated in the particular part of the return meant for turnover tax. In those cases, it may be said that complete return was filed. But we have already seen that the statutory requirements cannot be said to have been complied with, if only returns are filed. The statute requires that the returns must be accompanied by receipted treasury challan showing payment of the computed turnover tax. Admittedly, the computed tax was not paid. The given reason for non-payment is no protection or safeguard against the statutory result accruing from delayed payment. Interest, it is now settled, is imposed with a view to tightening up the machinery for collection of sales tax and as a deterrent measure so that dealers may not evade or delay the payment of tax [see Haji Lal Mohd. Biri Works v. State of U.P. [1973] 32 STC 496 (SC) and Kingsway & Co. v. Commercial Tax Officer [1990] 76 STC 119 (WBTT)]. Thus, accrual of interest occurs in accordance with the statute, if tax is not paid within the prescribed date. The interim order of injunction of this nature did not put a stop to the accrual of interest.
12. It is true that the applicant made payments of arrear turnover tax in terms of the High Court’s order dated March 25, 1988. But the order was confined to payment of the tax alone. The question of payment of interest was not a point for decision before the High Court and it was not also decided. Merely because the court directed payment of the arrear amount in instalments, there is no reason to infer that interest would not accrue. The effect of the final order dated March 25, 1988, was simply to grant instalments and thereby lessening the burden of arrear tax to be paid at a time. Had not the instalment order been made by the High Court, the applicant would have to pay the entire amount of around Rs. 38 lacs at a time and the taxing authorities would be free to adopt statutory coercive measures to realise the amount. There is no justification for reading into that order any further protection against accrual of interest.
13. Therefore, we are of the opinion that neither the interim order dated April 12, 1982 nor the final order dated March 25, 1988, passed by the High Court in C.R. 5416(W) of 1982 had the effect of nullifying the effect of the statutory provisions for accrual of interest or preventing the respondents from demanding interest in terms of Section 10A of the 1941 Act and Section 8A of the 1954 Act. In the class of returns where reason for non-payment of tax was not stated, there might not be filing of complete returns and, therefore, Sub-section (2) of the relevant sections of the respective Acts may apply. Assuming that in spite of non-mention of the reason for non-payment of tax, the returns can be said to be complete, those returns should be, in the alternative, governed by Sub-section (1). In the class of returns where the reason for non-payment was stated, Sub-section (1) of the relevant sections of the respective Acts should apply. If there is any case of a return, where otherwise a complete return of turnover tax was not furnished, there was no return in respect of turnover tax and, therefore, such a case should be governed by Sub-section (2) of the relevant sections of the respective Acts. Accordingly, the application is dismissed. Any interim order, if still in force, is vacated. No order is made for costs.
S.P. Das Ghosh, Chairman.
14. I Agree
P.C. Banerji, Technical Member.
15. I agree.