Commercial Taxes Officer vs Khandelwal Drug Agencies

J.K. Ranka, J.—This revision petition is directed against the order dated June 14, 1995, passed by the Rajasthan Sales Tax Tribunal (for short, "the Tax Tribunal") in Appeal No. 516/93/Jaipur. This petition was earlier submitted before the Rajasthan Taxation Tribunal and on its abolition, stood transferred to this court. This petition was admitted by this court on the following questions of law:

"(a) Whether the learned Rajasthan Sales Tax Tribunal was right in law in deleting the interest tinder section 11B of the Rajasthan Sales Tax Act?

(b) Whether the learned Tribunal was right in law in holding that the interest liability can be calculated from the date the tax is determined or quantified and not from the date from which the tax became due?"

The controversy, in brief, is that the petitioner-assessing officer passed an assessment order for the assessment year 1986-87 on March 6, 1993, holding that the commodity "Swad" is not a drug or medicine but is confectionery item and was accordingly liable to be taxed at the general rate of 10 per cent, and not at the confessional rate of six per cent, treating the same as an ayurvedic medicine. The tax was levied accordingly and interest was also levied u/s 11B(f) of the Rajasthan Sales Tax Act, 1954.

Dissatisfied with the aforesaid levy, the matter was carried in appeal by the respondent-assessee before the Deputy Commissioner (Appeals) (for short, "the DC (A)") who partly allowed the appeal. The matter was again carried in appeal by the respondent-assessee before the Tax Tribunal who also vide order dated June 14, 1995 upheld the levy of tax, however, insofar as liability of interest u/s 11B(f) of the, Act is concerned, it was held that the interest shall commence only on the date the tax was quantified. It is this observation/finding by the Tax Tribunal that the petitioner-assessing officer is aggrieved only on the issue of interest.

Ms. Tanvi Sahai on behalf of Mr. R.B. Mathur, learned counsel for the petitioner-assessing officer submits that the interest is consequential and it always goes with the tax burden and the direction by the Tax Tribunal that it shall commence only on the date the tax was quantified, is unjustified. She further submits that the Tax Tribunal, in the entire order, has not spelt out the basis for coming to such a finding. She submitted that nothing has been observed by the Tax Tribunal with regard to the liability of interest and only in the concluding part, in one line, it has been observed that "the interest liability of the appellant shall commence on the day the tax was quantified" and nothing more: The respondent-assessee wilfully did not disclose the sale of the above commodity as taxable and avoided clear legal tax liability and therefore, interest burden was part of the tax from day one. She accordingly prayed that the interest, being consequential, ought to have been levied from day one and not in the way the Tax Tribunal has directed.

Mr. Alkesh Sharma, learned counsel for the respondent-assessee, on the contrary, submits that the Tax Tribunal was correct and justified in coming to the said conclusion that interest was to be levied only from the quantification of the tax. He also submits that the impugned controversy in regard to even levy of tax is pending before the Tax Tribunal (now Tax Board) between the same parties and for the same years. He drew attention of this court to the judgment of this court dated July 6, 2007 passed in the case of CTO, Jaipur v. Khandelwal Drug Agencies in S.B. Sales Tax Revision Petition Nos. 359, 719 and 721 of 1999 and submits that this court has restored the matter back to the Tax Board to decide the issue afresh in the light of some additional facts brought on record before this court. He further submits that this matter may also be restored back to the Tax Board so that all the issues are simultaneously decided by the Tax Board.

I have considered the arguments advanced by learned counsel for the parties and perused the order impugned as well as the judgment of this court between the same parties, referred to supra.

Without going into the merits of the case and without giving any observation in the matter as ultimately it may affect the merits of the case, this court deems it appropriate to restore this matter also before the Tax Board where the other three matters, referred to supra, still claims to be pending before the Tax Board so that all the issues are decided by the Tax Board which is a final fact-finding authority once for all. It is also noticed that the matter had earlier travelled up to the honourable apex court and, therefore, at one point of time finality should come in the tax matters.

It has also been brought to the notice of this court that in the order dated July 6, 2007 (CTO, Jaipur v. Khandelwal Drug Agencies SB Sales Tax Revision Petition Nos. 359, 719 and 721 of 1999), passed in three revision petitions, this court had expected that the Tax Board would decide the controversy as expeditiously as possible and preferably within a period of six months, however, it is noticed that during the last more than six years, the aforesaid directions have not been complied and the matter is still pending before the Tax Board. Accordingly, this revision petition stands allowed. The order of the Tax Tribunal (now Tax Board) dated June 14, 1995 is quashed and set aside and the matter is remanded back to the Tax Board. Since the matter is quite old and pending even before this court for the last more than 15 years, therefore, it is deemed appropriate to direct the Tax Board to decide the issue expeditiously and preferably within a period of six months from today. The Tax Board is also directed to decide the three other matters already restored to it by this court, referred to hereinabove, within the same time.