Globe-Hi-Fabs vs The State of Haryana

Ajay Kumar Mittal, J.—In this writ petition filed under Articles 226/227 of the Constitution of India, the petitioner has prayed for issuance of a writ in the nature of certiorari for quashing the order dated 7.8.1992 (Annexure P-2) passed by respondent No. 3 for the assessment year 1985-86 vide which the order dated 29.9.1986 passed by the assessing authority was reversed and additional demand of Rs. 1,49,416/- was created; order dated 3.2.1997 (Annexure P-6) passed by respondent No. 2 dismissing the appeal of the assessee filed against the order dated 7.8.1992 (Annexure P-2); order dated 9.6.1997 (Annexure P-7) whereby the review petition filed against the order (Annexure P-6) by the assessee u/s 41 of the Haryana General Sales Tax Act, 1973 (in short "the Act") was dismissed and order dated 9.9.1998 (Annexure P-8) vide which the review application against the order (Annexure P-7) was dismissed.

The petitioner firm was assessed for the assessment year 1985-86 vide order dated 29.9.1986 (Annexure P-1) by the assessing authority. The petitioner was also similarly assessed for the assessment year 1987-88 on 9.6.1989. Respondent No. 3 issued three notices dated 14.6.1991, 29.11.1991 and 6.6.1992 to the assessee u/s 40(2) read with Section 36 of the Act. Respondent No. 3 vide order dated 7.8.1992 (Annexure P-2) revised the assessment order for the assessment year 1985-86. Further, Vide order dated 7.8.1992 (Annexure P-5), respondent No. 3 also revised the assessment order for the assessment year 1987-88. Against the orders dated 7.8.1992, the assessee filed appeal before respondent No. 2 who vide order dated 3.2.1997 (Annexure P-6) accepted the appeal for the assessment year 1987-88 whereas upheld the order of respondent No. 3 for the assessment year 1985-86. Thereafter, the assessee filed a review petition u/s 41 of the Act against the order (Annexure P-6). Respondent No. 2 vide order dated 9.6.1997 (Annexure P-7) dismissed the review petition. The assessee again filed review petition against the order (Annexure P-7) before the Tribunal who vide order dated 9.9.1998 (Annexure P-8) dismissed the same. Hence, the present writ petition.

Learned counsel for the petitioner restricted the claim in the writ petition to the charging of interest by the respondent-State. It was urged that in view of the judgments of this Court in Eicher Tractors Limited and Another Vs. State of Haryana and Another and Chaudhary Tractor Company Vs. State of Haryana, , the levy of interest u/s 25(5) of the Haryana General Sales Tax Act, 1973 (in short "the Act") would be only from the date of revisional order passed u/s 40(2) read with Section 36 of the Act.

We have heard learned counsel for the parties.

This Court in Eicher Tractors Limited''s case (supra) while allowing the writ petition to the extent that no interest was leviable for the period prior to the passing of the order of assessment had held as under:-

In the writ petition one of the contention raised is that u/s 9 of the Act purchase tax liability has been created if raw-material is purchased in the State and used in manufacture of goods which are sent out from the State other than by way of inter-State sale or export which was against the judgment of Hon''ble Supreme Court in Goodyear India Limited Vs. The State of Haryana and Another, This was in the nature of tax on consignment of goods covered by Entry 92-B of List-I. Further, contention raised is that liability to pay interest as per the scheme of the Act arises in respect of additional liability created under the assessment order and not on the date of transaction of purchase and sale or filing of return. The tax paid as per return does not carry any liability to pay interest till assessment is made. Reliance has been placed on the judgment of Hon''ble Supreme Court in J.K. Synthetics Limited and Birla Cement Works and another Vs. Commercial Taxes Officer, State of Rajasthan and another,

Further, this Court in M/s. Chaudhary Tractor Company''s case (supra) had recorded as under:-

As far as question No. (iv) is concerned, the counsel submitted that the same stands settled by Hon''ble the Supreme Court of India in the case of J.K. Synthetics Limited and Birla Cement Works and another Vs. Commercial Taxes Officer, State of Rajasthan and another, Frick India Ltd. and Another Vs. State of Haryana and Others, and Maruti Wire Industries Pvt. Ltd. Vs. S.T.O., Ist Circle, Mattancherry and Others, and a Full Bench of this Court in United Riceland Limited and another vs. State of Haryana and others [1997] 104 STC 362. In United Riceland Limited case (supra) it was held as under:-

As noted in the earlier part of the judgment, the liability of the petitioners to pay the purchase tax was apparently in dispute and not clear even to the respondent authorities. The issuance of notice u/s 40 of the Act proposing to take suo motu action with respect to the assessment years much prior to the date of issuance of the aforesaid notice is indicative, suggestive of the fact and strengthens the case of the petitioners so far as the demand of interest is concerned. Resort to the provisions of section 40 of the Act unambiguously demonstrates that the petitioner had not earlier been held responsible for their tax liability and the revisional authority on its own decided to call for the records of the case supposedly disposed of by the Assessing Authority for the purposes of satisfying himself as to the legality or propriety of the proceedings or of the orders made therein before passing the order determining the liability of the petitioners to pay the tax.

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Keeping in view the legal position and the admitted facts of the case, it cannot be said that the petitioner assessee had malafidely or intentionally evaded to pay the tax thus incurring the liability to pay the interest within the meaning of sub-section (5) of section 25 of the Act. The demand regarding payment of interest is also vague, ambiguous and without the authority of law. The petitioners cannot be directed to make the payment of interest for any period prior to the actual demand for the payment of purchase tax under the provisions of the Act. The impugned order in so far as it directs the payment of interest is liable to be quashed....

In view of the above, the interest u/s 25(5) of the Act would be calculated from the date of passing of the revisional order and no liability on account of interest could be maintained for the period prior to the said date.

Writ petition stands disposed of accordingly.