M/s. Keg Farm (P) Limited vs State of Haryana and Others

Hemant Gupta, J.—Challenge in the present writ petition is to the provisions of Haryana Act No. 4 of 1991 levying purchase tax on the goods, which also are amenable to sales Tax by amending Haryana General Sales Tax Act, 1973 (for short the Act). Challenge is also to the levy of interest by the Revisional Authority imposed by relying upon the judgment of Supreme Court in Associated Cement Company Limited Vs. Commercial Tax Officer, Kota and Others, . Learned counsel for the petitioner submits that the vires of Act No. 4 of 1991 have been upheld by the Supreme Court in a judgment reported as Hotel Balaji and others, Vs. State of Andhra Pradesh and others, etc. etc., . It is also contended that charging of interest is not tenable for the reason that the judgment referred to by the Revisional Authority has since been reversed by the Supreme Court in a judgment reported as J.K. Synthetics Limited and Birla Cement Works and another Vs. Commercial Taxes Officer, State of Rajasthan and another, .

On the other hand, learned counsel for the respondents relied upon a Full Bench judgment of this Court in M/s. United Riceland Limited & another Vs. The State of Haryana & others 1996 (1) ILR 398 to contend that to determine the liability to pay the interest or penalty, the conduct of the assessee for the entire period beginning from the date of return of turn-over till final payment of the tax assessed is made is to be considered. Keeping in view the conduct of the assessee, the purchase tax was payable by the petitioner before the filing of its return. Therefore, the petitioner is liable to pay interest for not paying the tax on the due dates.

We have heard learned counsel for the parties and found that the legality of Act No. 4 of 1991 has been upheld by a Full Bench of this Court in M/s. United Riceland Limited (supra) following the judgment of the Supreme Court in Hotel Balaji''s case (supra). Thus, there is no merit in the writ petition in respect of challenge to the legality of Act No. 4 of 1991.

However, in respect of levy of interest, we may point out that the petitioner has filed its quarterly return in time and paid sales tax in terms of the return. However, the Revisional Authority found that the petitioner had paid the hire charges for the poultry equipment and incubator (hatcheries) etc., which is liable to purchase tax u/s 2(j)(iv) of the Act as the hiring charges come within the definition of ''purchases''. Consequently, the interest u/s 25(5) of the said Act was imposed upon the petitioner.

There was serious dispute regarding levy of purchase tax, therefore, the conduct of the petitioner was not such which could fall within the scope of the intention of the assessee as delineated by the Full Bench of this Court in M/s. United Riceland Limited''s case (supra). In J.K. Synthetics Ltd. case (supra), the Supreme Court has held that the assessee is not liable to pay interest on the additional sales tax on the date original return was filed, but interest has to be paid only for the period subsequent to determination of the sales tax under the final assessment while overruling the judgment of the Supreme Court in M/s. Associated Cement Company Ltd. case (supra).

Since the liability to pay interest has attained finality with the order of the Revisional Authority on 07.07.1993, the interest would be payable not from the date of assessment order, but from the date of the such imposition. Consequently, while quashing the levy of interest vide order dated 07.07.1993 imposed as the amount payable at the time of filing of the returns, the present writ petition is disposed of with the observation that the petitioner shall be liable to pay interest on the amount assessed from the date the Revisional Authority has passed an order.