Sakthi Sugars Ltd. vs The Assistant Commissioner of Commercial Taxes, Central Assessment Circle I, Coimbatore and Others

Chandurkar, C.J.—These several writ appeals and writ petitions raise a question with regard to the validity of section 24(3) of the Tamil

Nadu General Sales Tax Act, 1959 (hereinafter referred to as the Act) as well as the validity of the notices of demand issued u/s 24(3) of the Act

before it was amended by Act 22 of 1982 with effect from 1st November, 1982 and under rule 18(3) of the Tamil Nadu General Sales Tax Rules,

1959 (hereinafter referred to as the Rules). It is not necessary at this stage to refer to the facts in these several cases. Suffice it to mention that in

almost all these petitions and appeals, the assessments were regulated by rule 18 of the Rules, and consequently monthly returns in respect of the

turnover of the dealers concerned had to be filed accordingly to rule 18 and in cases where the sales tax deposited along with the monthly return

had been found to be deficient, notices of demand have been issued demanding penalty u/s 24(3) of the Act. The penalty demanded in these

notices is in respect of the entire period of one month, whereas the sales tax had already been deposited during the course of a calendar month.

In order to appreciate the arguments advanced by the several learned counsel appearing on behalf of the dealers-assesses, it is necessary to

briefly outline the scheme of the Act and the Rules.

The charging section is section 3, and section 11 provides that the tax under the Act shall be assessed, levied and collected in such manner as

may be prescribed. Section 12 deals with the procedure to be followed by the assessing authority and the assessment is on the basis of the

prescribed return relating to the turnover submitted in the prescribed manner within the prescribed period. There is a power to make a best

judgment assessment u/s 12(2). Sub-section (3) of section 12 deals with penalty which reads as follows :

Section 12(3) In addition to the tax assessed under sub-section (2), the assessing authority may, in the same order of assessment passed under

sub-section (2), or by a separate order, direct the dealer to pay by way of penalty, -

(a) a sum which shall not be less than fifty per cent. but which shall not be more than one hundred and fifty per cent. of the amount of tax due on

the turnover that was not wilfully disclosed by the dealer in his return, or

(b) a sum which shall not be less than fifty per cent. but which shall not be more than one hundred and fifty per cent. of the tax assessed in the case

of wilful failure to submit a return.

Under sub-section (4), there is a power in the assessing authority, notwithstanding anything contained in sub-sections (1), (2) and (3), to assess the

dealer on the basis of accounts, if the assessing authority is satisfied that the accounts maintained by the dealer are correct and such dealer has

either failed to submit the prescribed return or failed to submit the prescribed return within the time as may be prescribed or if the return submitted

is found to be incorrect or incomplete. In a case where the assessment is made under sub-section (4), there is power to the assessing authority to

levy penalty under sub-section (5), and the extent of the penalty is prescribed in three clauses of sub-section (5). A proviso is enacted in sub-

section (5) which provides as follows :

Provided that no penalty under sub-sections (3) and (5) shall be imposed after a period of five years from the expiry of the year to which the

assessment relates and unless the dealer affected has had a reasonable opportunity of showing cause against such imposition.

Section 16 of the Act deals with assessment of escaped turnover, and in assessing the escaped turnover, a limitation of five years is prescribed, the

period of five years commencing from the expiry of the year to which the tax relates, and the assessing authority has the power to make a best

judgment assessment of the turnover which has escaped assessment and assess the tax payable on such turnover after making such enquiry as it

may consider necessary, and after giving the dealer a reasonable opportunity to show cause against such assessment. Section 16(2) deals with levy

of penalty in the case of escaped assessment and it provides as follows :

Section 16(2) In making an assessment under clause (a) of sub-section (1), the assessing authority may, if it is satisfied that the escape from

assessment is due to wilful non-disclosure of assessable turnover by the dealer, direct the dealer to pay, in addition to the tax assessed under

clause (a) of sub-section (1), by way of penalty, a sum which shall not be less than fifty per cent. but which shall not be more than one hundred and

fifty per cent. of the tax so assessed :

Provided that no penalty under sub-section (2) shall be imposed unless the dealer affected has had a reasonable opportunity of showing cause

against such imposition.

Sub-sections (3), (4) and (5) of section 16 deal with computation of the period of five years and they are not relevant for our purpose.

The other relevant provision which needs to be referred is section 22 which enacts a prohibition against the collection of tax by a dealer. Under

that provision, it is provided that no person who is not a registered dealer shall collect any amount by way of tax or purporting to be by way of tax

under the Act, and no registered dealer shall make any such collection except in accordance with the provisions of the Act and the Rules made

thereunder. Sub-section (2) is the penal section which reads as follows :

Section 22(2) If any person or registered dealer collects any amount by way of tax or purporting to be by way of tax in contravention of the

provisions of sub-section (1), whether or not any tax is due from such person or dealer under this Act in respect of the transaction in which he

collects such amount, the assessing authority may, after giving such person or dealer a reasonable opportunity of being heard, by order in writing

impose upon him by way of penalty a sum not exceeding one and a half times such amount :

Provided that no proceedings under this sub-section shall be commenced after a period of five years from the expiry of the year in which the

amount has been collected.

Section 24 deals with payment and recovery of tax. Section 24(1) reads as follows :

Section 24(1) The tax assessed under this Act shall be paid in such manner and in such instalments, if any, and within such time, as may be

specified in the notice of assessment, not being less than twenty-one days from the date of service of the notice. If default is made in paying

according to the notice of assessment, the whole of the amount outstanding on the date of default shall become immediately due and shall be a

charge on the properties of the person or persons liable to pay the tax under this Act.

Section 24(2) deals with the mode of recovery of the arrears of tax as land revenue, or on an application to any Magistrate, by such Magistrate as

if it were a fine imposed by him. Then, sub-section (3) before amendment which is relevant read as follows :

Section 24(3) If the tax assessed under this Act or any instalment thereof is not paid by any dealer or person within the time specified therefore in

the notice of assessment or in the order permitting payment in instalments, the dealer or person shall pay by way of penalty, in addition to the

amount due, a sum equal to a sum calculated at the rate of one rupee for every hundred rupees or part thereof of such amount for each month or

part thereof after the date specified for its payment.

For the purpose of these cases, we are not concerned with the two provisos to sub-section (3).

We may, however, point out that some amendments were made in section 24 by amending sub-sections (1) and (3) by addition of the words

or has become payable"" in the opening part of section 24(1) after the words ""the tax assessed"" and before the words ""under this Act"", with the

result, that section 24(1) as amended now reads as follows :

Section 24(1) The tax assessed or has become payable under this Act shall be paid in such manner and in such instalments, if any, and within such

time, as may be specified in the notice of assessment, not being less than twenty-one days from the date of service of the notice. If default is made

in paying according to the notice of assessment, the whole of the amount outstanding on the date of default shall become immediately due and shall

be a charge on the properties of the person or persons liable to pay the tax under this Act.

A consequential amendment also is made in sub-section (3), the material part of which reads as follows :

Section 24(3) If the tax assessed or has become payable under this Act or any instalment thereof is not paid by any dealer or person within the

time specified therefore in the notice of assessment or in the order permitting payment in instalments, the dealer or person shall pay by way of

interest, in addition to the amount due, a sum equal to a sum calculated at the rate of two per cent. of such amount for each month or part thereof

after the date specified for its payment.

Here also, the subject-matter of sub-section (3) which originally was only the tax assessed under the Act, has now become ""tax assessed or has

become payable under this Act"". The other amendment is, instead of the word ""penalty"", the word now used is ""interest"". Then there are penalties

prescribed under the Act and the penal provision is in section 45 which we need not set out in detail. But it has to be mentioned that u/s 45(2), any

person who wilfully submits an untrue return, or, not being already an assessee under the Act, fails to submit a return as required by the provisions

of the Act or the Rules made thereunder and any person, who inter alia ""wilfully acts in contravention of any of the provisions of the Act"", is liable

to be prosecuted and he can be convicted by a Presidency Magistrate or a Magistrate of the First Class and can be required to pay a fine which

may extend to one thousand rupees and in the event of a second or subsequent conviction, to simple imprisonment which may extend to six months

or a fine which may extend to two thousand rupees or both. We are not concerned with the other provisions in section 45.

In the Act, there are provisions for appeal and revision. A first appeal lies to the Appellate Assistant Commissioner u/s 31 or to the Deputy

Commissioner, as the case may be. The Deputy Commissioner has revisional jurisdiction u/s 32 which he can exercise suo motu. Revisional

powers are also vested with the Deputy Commissioner u/s 33 which could be invoked by ""any person objecting to an order passed or proceeding

recorded under this Act for which an appeal has not been provided for in section 31 or section 31-A"". The limitation for such a revision application

is thirty days from the date on which the order or the proceeding was served on him. A second appeal is provided in section 36 to the Appellate

Tribunal in certain cases.

The scheme of the Rules in so far as the present cases are concerned, appears to be that rules 5 to 17 prescribe the procedure for assessment.

Rule 9 deals with the obligation of a dealer to submit a return of his total turnover on yearly basis, and thereafter rules 10 to 17 lay down the

procedure of assessment. We may highlight the fact that in the Rules are certain rules like rules 13, 14 and 15 which specifically provide for a

notice to the dealer in respect of his liability to pay sales tax. Rule 13 reads as follows :

Rule 13. As soon as the tax has been provisionally fixed under rule 10 or 11, the assessing authority shall issue to the dealer a notice in form B

and the dealer shall pay for each month of the year of assessment the tax provisionally fixed in equated instalments for the rest of the year in the

manner specified in the notice.

Form B is described as ""notice of provisional assessment and demand for payment of tax or taxes"". It expressly calls upon the dealers to pay the

tax demanded ""within thirty days from the date of service of the notice or on or before the 10th of the next month whichever is later, and the tax for

each of the remaining months on or before the 10th of the succeeding month"". Rule 14 dealing with a causal trader referred to in section 2(e) and

sub-rule (3)(a) of rule 14 enable the assessing authority to assessee the tax payable according to the best of his judgment, if no return is submitted

by the casual trader as required by sub-rule (2), and the assessing authority has to issue a notice of demand in form B-4 for the tax due. Sub-rule

(3)(a) further provides that the casual trader shall thereupon pay the sum demanded within the time allowed and in the manner specified in the

notice. Rule 15 provides that every dealer liable to submit a return under rule 9 shall submit the return to the assessing authority within the

prescribed period, unless he has elected to be assessed by the method described in rule 18, in form A-1 showing the actual total and taxable

turnover in the preceding year and the amounts by way of tax or taxes actually collected during that year. Under rule 15(4), if the dealer who is

liable to submit a return in form A-1 or form AA-1, as the case may be, fails to deposit the required tax, then the assessing authority ""shall serve

upon the dealer a notice in form B-1"" and the dealer shall pay the sum demanded at the time and in the manner specified therein. Form B-1 which

is headed as the ""notice of provisional annual demand"" requires the dealer to pay the amount demanded within thirty days from the date of service

of the notice and it warns him that if the amount is not paid, ""the amount will be recovered as if it were an arrear of land revenue or fine imposed by

a Magistrate"" and he will also be liable to pay the penalty prescribed under sub-section (3) of section 24 of the Act. Rule 16 provides that after

making the final assessment, the assessing authority shall examine whether any amount is due from the dealer towards it after deducting any tax

already paid on the provisional assessment with reference to rule 10 or 11 or at the time of submission of the return in form A-1 or AA-1 with

reference to sub-rule (4) of rule 15. If any amount is found to be due from the dealer towards the final assessment or revision of assessment, the

assessing authority shall serve upon the dealer a notice in form B-3 and/or form B-9 and the dealer shall pay the sum demanded at the time and in

the manner specified in the notice.

The scheme of rule 18 appears to be that in lieu of the method of assessment described in the earlier rules which is done on the basis of annual

returns, a facility is made available to the dealer to submit monthly returns and deposit the tax payable. We need to reproduce only rule 18(1), (3)

and (4) for our purpose. The rule reads as follows :

Rule 18. (1) In lieu of the method of assessment described in the foregoing rules, the method described in sub-rules (2) to (7) of this rule may, at

the option of the dealer, be adopted. If the dealer desires that this method of assessment should be applied to him, from the beginning of any year

he shall intimate his desire to the assessing authority at the time of submitting the return prescribed in rule 9 or sub-rule (2) of rule 15 and shall

submit returns and pay tax in accordance with the following sub-rules.

(1-A) A dealer who is eligible to opt for the method of assessment described in sub-rules (2) to (7) of this rule and who has not exercised his

option as provided in sub-rule (1) of this rule, may, if he desires that this method of assessment should be applied to him, intimate his option to the

assessing authority at any time during the course of the year. On his so opting, the dealer shall, within a period of thirty days from the date of his

option, submit a return or returns, in form A-1 for the preceding month or months and along with the return or returns, he shall also submit proof

for payment of full amount of tax or taxes payable under sections 3, 4 or 5 of the Act, for the month or months to which the returns relate after

adjusting the tax, if any, already paid under rules 10 to 13 for that year.

(2) ..............

(3) The return in form A-1 so filed shall, subject to the provisions of sub-rule (4), be provisionally accepted. If the return is submitted without proof

of payment as specified in sub-rule (1) of rule 55 for the full amount of tax payable after deducting therefrom the amount, if any, claimed as

reimbursement or refund due in the month under rule 23, such amount of tax shall become due on the date of receipt of the return or on the last due

date as prescribed in sub-rule (2), whichever is later, and shall be recovered in accordance with the provisions of the Act without any notice of

demand to the dealer.

(4) If no return is submitted in respect of any month on or before the date specified in sub-rule (2) or before the expiry of the period prescribed in

sub-rule (5) or if the return submitted appears to be incorrect or incomplete, the assessing authority shall, after making such enquiry as he consider

necessary and after giving the dealer notice as prescribed in rule 12, determine the turnover to the best of his judgment and provisionally assess the

tax or taxes payable for the month and shall serve upon the dealer a notice in form B-2 and the dealer shall pay the sum demanded at the time and

in the manner specified in the notice.

The above rules refer to provisional assessment, and under sub-rule (6), the assessing authority, after the close of the year in which the

provisional assessment as laid down in sub-rule (3) or sub-rule (4) has been made or in the course of the year to which a return submitted under

sub-rule (5) relates, is made to scrutinise the accounts, registers, records and other documents and after such enquiry as he consider necessary,

satisfy himself that the returns filed are correct and complete, and finally assess under a single order on the basis of the returns the tax or taxes

payable under any of the sections 3, 4 or 5 for the year to which the returns relate. Under sub-rule (7) it is provided that after the final assessment

is made and if any amount is found due from the dealer, ""the assessing authority shall serve upon the dealer a notice in form B-3 and/or form B-9

and the dealer shall pay the sum demanded at the time and in the manner specified in the notice. If there is any excess already paid by him, then a

refund has to be made.

Several demands u/s 24(3) of the Act have been raised in respect of shortfalls in the deposits which are required to be made along with the

return under rule 18(3) of the Rules. When such demands were made and revisions were filed u/s 33, it appears that the departmental authorities

declined to entertain these revision petitions and entertain a contention that the dealer are not liable to pay any penalty u/s 24(3) of the Act in a

case where the assessee-dealer has opted out for the method of assessment prescribed under rule 18 and had filed the necessary return under rule

18(3). As a part of the challenge to the notices demanding the penalty levied u/s 24(3), the dealers also challenged the constitutional validity of

section 24(3) of the Act itself.

One such matter came before a learned single Judge of this Court in Writ Petition No. 11015 of 1981 (Khivraj Motors Ltd. v. Commercial

Tax Officer reported in [1982] 50 STC 141). In that decision, the learned Judge (Ramanujam, J.) held that there is no infirmity in section 24(3) of

the Act. This view of the learned Judge is challenged in Writ Appeal No. 10 of 1982 which is one of the matters argued before us. It would

therefore be proper to refer to the view which the learned Judge has taken with regard to the validity of section 24(3) of the Act.

In the case before Ramanujam, J., the petitioner-company (appellant in W.A. No. 10 of 1982) was a company which had opted for the

method of assessment which is prescribed by rule 18. Monthly returns were submitted in form A-2. While re-examining the figures given in the

monthly returns for the year 1977-78, it was discovered that there was a discrepancy in the monthly returns filed for the month of December, 1977

and therefore, on 28th July, 1981 it filed a revised return for the month of December, 1977. In accordance with the said revised return, the

petitioner also paid sales tax, surcharge and additional tax amounting to Rs. 66,698. On receipt of the revised return, the Commercial Tax Officer

passed an order dated 31st August, 1981 u/s 24(3) of the Tamil Nadu General Sales Tax Act taking the view that the dealer should have paid the

amount of tax for December, 1977 on or before 25th January, 1978 and since the payment has been delayed from 25th January, 1978 to 28th

July, 1981 the dealer has to pay a penalty of Rs. 57,360 u/s 24(3) of the Act. This demand was challenged before Ramanujam, J. The main

ground on which section 24(3) of the Act was challenged before Ramanujam, J., was that section 24(3) does not provide any prior opportunity to

the assessee before levy of penalty and the section must therefore be declared as void and inoperative. The opportunity that was sought was on the

analogy of the provisions of section 274(1) of the Income Tax Act, 1961. The learned Judge took the view that section 24(3) of the Act does not

give any room for exercise of any discretion by the assessing authority and when the quantum of penalty is fixed by the section itself and is directed

to be collected without giving any discretion to the assessing authority, there is no question of the assessing authority giving any opportunity to the

assessee to show that the case does not warrant any levy of penalty. The learned Judge observed as follows :

When the Legislature has provided that any tax assessed is not paid within the date specified, penalty should be collected for the delay in payment

of the tax assessed, the section cannot be said to be invalid. If the section provides for certain contingency under which the assessing authority is

enabled to waive the penalty, an opportunity should be given to the assessee, but where the statute says that if the tax assessed is not paid within

the specified date, an additional amount by way of penalty shall be paid by the assessee, there is no question of the assessee being given an

opportunity to put forward his objections not to levy the penalty. That the Legislature has power to make such a provision cannot be doubted. It is

true the provision in section 24(3) is very stringent but the Legislature has got the power to enact such a provision for the effective recovery of the

tax assessed. Section 24(3) is therefore quite valid and enforceable.

It is the correctness of this view which is challenged before us. Apart from the grounds which were urged before the learned Judge, several other

grounds were raised before us to which we shall refer.

Before, however, we consider the arguments advanced before us, it is necessary to appreciate the true nature and scope of section 24(3) of

the Act. We are dealing with a taxing statute and it would be useful to reproduce at the outset the observations of Lord Dunedin in Whitney v.

Commissioners of Inland Revenue [1926] AC 37 which has been cited with approval by the Supreme Court in Khazan Chand and Others Vs.

State of Jammu and Kashmir and Others, regarding the scheme of a taxing statute. This passage reads as follows :

Now there are three stages in the imposition of a tax. There is the declaration of liability, that is the part of the statute which determines what

persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment. That, ex hypothesi, has

already been fixed. But assessment particularises the exact sum which a person liable has to pay. Lastly, come the method of recovery, if the

person taxed does not voluntarily pay.

We are not concerned with the first two stages in the instant cases. Section 24 of the Act is expressly designated as a section dealing with payment

and recovery of tax. There can therefore be no doubt that while enacting section 24 the Legislature was laying down different modes of recovery.

As a part of the scheme, for recovery of tax under the Act, it is enacted by section 24(1) that the tax assessed shall be paid in such manner, in such

instalments, if any, and within such time as may be specified in the notice of assessment, not being less than twenty-one days from the date of the

service of the notice. It is further provided that, if the tax is not paid according to the notice of assessment, the whole of the amount outstanding on

the date of default shall become immediately due and shall be a charge on the properties of the person liable to pay the tax under the Act. Thus,

there is a statutory charge created on the property of the person who is liable to pay the tax. Sub-section (2) of section 24 refers to the priority of

the charge, and subject to the charge of land revenue and the claim of the bank mentioned in section 24(2), the charge with regard to tax due is to

have priority over all other claims against the property of the said dealer. It also prescribes the mode of recovery, the arrears of tax being

recovered as arrears of land revenue or on an application made to a Magistrate and the Magistrate recovering the arrears in the same manner as if

it were a fine imposed by him. Sub-section (3) provides that in a case where there is a delay in payment of tax or the instalments, this delay has to

be counted with reference to the time specified in the notice of assessment or in the order permitting payment in instalments. In other words, if a tax

is assessed under the Act and if that tax is not paid within the time specified in the notice of assessment, then the section provides that the dealer or

the person liable to pay the tax shall pay ""by way of penalty"", in addition to the amount due, a sum equal to a sum calculated at the rate of two per

cent. of such amount for each month or part thereof after the date specified for its payment. In the case of defaulted instalments, the penalty will be

payable at the prescribed rate on the amount of instalment. Sub-section (3) of section 24 thus casts a statutory obligation to pay the penalty on

arrears of tax or instalment as the case may be. The amount due as tax is described as ""tax assessed under the Act"". When section 24(3) refers to

tax assessed under the Act"", necessarily the reference is to sections 11 and 12, because section 11 says that tax under the Act shall be assessed,

levied and collected in such manner as may be prescribed. As already pointed out, section 12 prescribes the procedure to be followed by the

assessing authority. The methods of assessment, which we have already referred to, are prescribed in rules 5 to 17 and 18. Both these methods

are alternative methods of assessment depending upon the choice of the dealer concerned. Rule 18 expressly provides that in lieu of the method of

assessment under the foregoing rules, the methods prescribed in rule 18 can be resorted to only at the option of the dealer. Therefore, when sub-

section (3) of section 24 of the Act refers to ""tax assessed under the Act"", we must necessarily refer to rules 5 to 17 and 18 because the results of

the assessment can be ascertained only when the rules are put into operation.

Section 24(3) also prescribes the rate at which the penalty shall be levied, the amount with reference to which the penalty shall be levied and

the period for which the penalty shall be levied. The amount with reference to which the penalty is to be levied is the tax assessed which is not paid.

The rate at which the penalty is to be levied is two per cent. for each month and the period for which it is levied is a month or a part thereof.

We may at this stage itself notice a contention which has been raised to the effect that, in spite of the payment being made on a particular date

within the calendar month, the department has levied penalty for the entire period of one month. By way of illustration, it will appear from the facts

of Writ Petition No. 2993 of 1982 that by a notice dated 3rd April, 1982, the dealer was called upon to pay a penalty of Rs. 37,759 in respect of

arrears of tax of Rs. 18,87,963.55 which were admittedly payable on or before 20th March, 1982 but were paid on 25th of March, 1982. The

payment was thus delayed only by five days. The contention is that in spite of the express provision in section 24(3) that the penalty shall be for

each month or part thereof, the penalty has been levied for the whole of the month and not for the part of the month consisting of five days, the

deposit having been made on 25th of March, 1982. The notice of demand of penalty which is questioned in Writ Petition No. 2993 of 1982

clearly shows that the amount of Rs. 37,759 by way of penalty is computed at two per cent. per month for the entire month, and not only for the

five days by which the payment has been delayed. It is not disputed in the counter that the penalty has been levied for a whole month, though the

actual delay was only for five days. When it comes to determination of the period for which the penalty is to be paid, we fail to see how, in the face

of the express provision in section 24(3) that the penalty has to be levied for that part of the month for which the amount remains unpaid

commencing from the last date on which the payment could have been made a penalty for the whole of the month could have been levied by the

taxing officer. In all fairness, the learned Advocate-General has very fairly conceded that the taxing officer did not have any jurisdiction to levy

penalty for the entire month whenever payment has been made prior to the expiry of the month. On the plain words of section 24(3), there is clear

infirmity in the notice of demand which is impugned in Writ Petition No. 2993 of 1982 and hence that demand is quashed and the matter is

remanded back to the authorities concerned to redetermine the penalty.

15-A. Since as a part of the argument challenging the validity of section 24(3) stress has been laid on the use of the word ""penalty"" and a

comparison is sought to be made with the other provisions providing for penalty in the Act, we may at once point out that on a true construction of

section 24(3) of the Act, though the word ""penalty"" has been used therein, what has been provided for, is nothing more that interest, which is

claimed by the State, because the amount of arrears of taxes which should have gone to the coffers of the State is being retained by the dealer, and

it only by way of compensation for use of such of the moneys, which rightly belongs to the State by the assessee that a payment to the State which

has been described as penalty, has been provided for in section 24(3) of the Act.

So far as taxing statutes are concerned, there is a well-recognised distinction between tax, interest and penalty. Penalty is always levied only

when there is a wilful violation of the provisions of a taxing statute. The Supreme Court has referred to these three concepts in Associated Cement

Company Limited Vs. Commercial Tax Officer, Kota and Others, . In that decision, the Supreme Court observed as follows :

We are concerned in this case with the liability of the assessee to pay interest on the amount of tax which had remained unpaid. Tax, interest and

penalty are three different concepts. Tax becomes payable by an assessee by virtue of the charging provision in a taxing statute. Penalty ordinarily

becomes payable when it is found that an assessee has wilfully violated any of the provisions of the taxing statute. Interest is ordinarily claimed from

an assessee who has withheld payment of any tax payable by him and it is always calculated at the prescribed rate on the basis of the actual

amount of tax withheld and the extent of delay in paying it. It may not be wrong to say that such interest is compensatory in character and not

penal.

We have earlier referred to the statutory provisions in the Act like sections 12(3), 12(4), 16(3) and 22(2) which specifically deal with penalty. If

section 24(3) is properly considered in the context of those provisions as also in the light of the fact that it is part of a recovery procedure laid

down by the Legislature, it is obvious that though the word ""penalty"" is used in section 24(3) what is really provided for is payment of interest by

the defaulting assessee by way of a compensatory payment to the State for the moneys which the State was entitled to recover by way of tax and

which therefore really belonged to the State. Such a provision is made with a view to induce the taxpayer to pay the taxes promptly.

The competence of the Legislature to enact a provision making the assessee liable to pay interest in case the tax is not paid on the due date, is

now well-recognised. Such a provision is merely incidental to the levy of tax and is a part of the procedure for recovery of tax. In Khazan Chand

and Others Vs. State of Jammu and Kashmir and Others, , while dealing with section 8(2) of the Jammu and Kashmir General Sales Tax Act, it

was clearly observed that payment of interest in case of default in payment of tax is a means of compelling the assessee to pay the tax due by the

prescribed date and that it is a mode of recovery of tax and well within the legislative power of the State. Section 8(2) which fell for consideration

before the Court in Khazan Chand and Others Vs. State of Jammu and Kashmir and Others, reads as follows :

... (2) If the tax or any other amount due under this Act is not paid by the dealer or any other person, by whom it is payable, within the period

specified in demand notice, the dealer or such other person shall be liable to pay interest on the tax or other amount from the date it was payable to

the date of actual payment at the following rates :-

(a) if the default is for a period not exceeding three months at 1 per cent. per month;

(b) if the default is for a period exceeding three months but less than six months at 2 per cent. per month;

(c) if the default is for a period exceeding six months at 3 per cent. per month :

......................

Explanation. - Interest shall be charged for full month and not for a part of the month.

When section 8(2) was challenged on the ground that it violated article 14 of the Constitution of India, the Supreme Court in Khazan Chand and

Others Vs. State of Jammu and Kashmir and Others, observed as follows at page 224 :

.... It is true that the rate of two per cent. per month and particularly the rate of three per cent. per month can be said to be on the high side, but

we fail to see how this would render the provisions of that sub-section void or unconstitutional. Providing for payment of interest in case of delayed

payment of tax is a method usually adopted in fiscal legislation to ensure that the amount of tax which is due is paid by the prescribed time and

provisions in that behalf form part of the recovery machinery provided in a taxing statute. It is for the State to provide by what means payment of

tax is to be enforced and a person who does not pay the amount of tax lawfully and admittedly due by him can hardly complain of the measures

adopted by the State to compel him to pay such amount. It neither lies in the defaulter''s mouth to protest against the rate of interest charged to him

nor is it open to him to dictate to the State the methods which it should adopt for recovering the amount of tax due by him ....

No more authority is therefore needed to hold that a statutory provision enacted by way of recovery procedure providing for payment of

interest on tax remaining unpaid from the date on which the tax was due till the date of payment, is within the legislative competence of the

Legislature.

We may also, however, refer to the decision of this Court in A.M. Sali Maricar and Another Vs. Income Tax Officer and Another, which

incidentally is a decision relied upon on behalf of the petitioners, in which the Division Bench has referred to the taxing statutes in different countries

of which payment of compulsory interest for the period of delay in payment is a common feature universally recognised. We shall refer later to the

observations in these decisions on which the petitioners have relied when we deal with the challenge to the validity of section 24(3). The arguments

advanced by the learned counsel for the several petitioners therein related to the validity of section 140A(3) of the Income Tax Act, which has

been held by the Bench of this Court to be confiscatory in character. In that decision, the Division Bench observed as follows :

Our attention was not drawn to any provision in the taxing statute of any other country where the law has provided for penalty of this character for

failure or non-payment of the tax payable. On the other hand, we find, the legislative provisions in the Income Tax Acts of the United States of

America, the United Kingdom, Australia and Sweden contain only provision for payment of compensatory interest at the rates varying up to 10 per

cent. of the tax in arrear. These compensatory interests are also to be paid with respect to the period of the delay in payment. We find the

following passages in 51 American Jurisprudence, pages 848 and 850 :

''The continuance of regular and uniform receipt of the public revenue is essential to the continued existence of the State; it cannot tolerate delay in

the payment of taxes, and to induce prompt payment of taxes when due, the legislatures of the several States have very generally imposed penalties

upon tax-payers who fail to pay their taxes within a specified period. Such an imposition is doubtless within the constitutional power of the

legislature. The State may provide a penalty for failure promptly to pay a corporate franchise tax ..........

The power to exact interest on delinquent taxes is an incident of the power to tax, and many jurisdictional statutes impose liability for interest on

delinquent taxes in the nature of a penalty for non-payment of taxes when due. However, the imposition of liability for interest for non-payment of

taxes when due is not necessarily equivalent to a penalty thereon. This depends upon the wording and context of the statute. In many instances the

legislature in imposing liability for interest uses that term in its ordinary sense of a charge imposed for the use of the money; this may by indicated by

the fact that the amount of interest imposed is fixed at the legal rate of interest and chargeable on other obligations.''

The Division Bench also quoted extensively from Introduction to Taxation by Ray N. Sommerfeld, Hershel N. Anderson and Horace R. Broek

where at pages 461 and 462 the following appears :

Penalties :

The Internal Revenue Code includes a number of penalties intended to encourage taxpayers to file a timely and accurate return and to pay their tax.

The more important penalties are :-

...........

........ If the taxpayer fails to pay his tax on time, a penalty of 6 per cent. per annum is added to the tax. The 6 per cent. runs from the due date

of the return without considering extensions of time for filing.

A passage from a book on taxation in Sweden has also been quoted by the learned Judges. The book is World Tax Series, relating to Sweden

where at page 602 the following appears :

Any one who fails to pay a tax when due, whether preliminary or final, is subject to a penalty of 4% of the amount due (UF 58).

With regard to Australia, in the book World Tax Series, at page 261, the observations are :

If tax is not paid when due, additional tax may be assessed at the rate of 10% per annum on the amount unpaid (207). The additional tax is

computed from the original due date to the date of payment, or, where an extension of time has been granted, from such later date as the

Commissioner determines. Under-estimation of provisional tax is subject to penalty as explained at 12/1.4d.

The learned Judges have also taken the view that even though the word ""penalty"" is used, it provides only for compensatory interest, and quoted

with approval the observations of this Court in M.R. Vidyasagar Vs. Income Tax Officer, Madurai, and Another, , where the Court took the view

that it is the nature and substance of the levy that determines whether it is compensatory or otherwise, and the phrase ""penal interest"" in section

18A(6) of the Income Tax Act, 1922 was held to be not in the nature of penalty but in the nature of compensation for delay in payment. Thus it is

clear that whether a levy is to be construed as penalty or interest in the nature of compensatory payment has to be determined with reference to the

relevant provisions of the Act. Apart form the fact that there are independent penalty provisions which have been enacted in the Act, a clear

distinction between penalty and interest is to be found in the Act itself. Prior to this amendment, the section reads as follows :

Recovery of penalty. - Any penalty payable under this Act shall be deemed to be tax under this Act, for the purposes of collection and recovery

and shall be without prejudice to the institution of any proceeding for an offence under this Act, or for the recovery of the entire amount remaining

unpaid under this Act.

Section 25 as amended refers to ""recovery of penalty or interest"" and reads as follows :

Any penalty or interest payable under this Act shall be deemed to be tax under this Act, for the purposes of collection and recovery and shall be

without prejudice to the institution of any proceeding for an offence under this Act, or for the recovery of the entire amount remaining unpaid under

this Act.

Undoubtedly, prior to the amendment by Act 22 of 1982, the word ""interest"" was not to be found in section 25, but having regard to the scheme

of the Act which provides different penalties for some wilful acts or omissions and other penalties in the form of punishment for offences

prescribed, it is obvious to us that section 24 refers to penalty in the nature of compensatory payments for the delay in making payment of taxes.

On a true construction section 24(3) thus provides only for payment of interest by the defaulting assessee. The Legislature has statutorily fixed

the rate of interest as well as the period for which, in a given case, the defaulting assessee will be required to pay the interest. The Legislature has

left no discretion with the assessing authority with regard to any of these matters. With respect, therefore, Ramanujam, J., is right when he

observed that there is no discretion left to the assessing authority either with reference to the rate at which the penalty is to be levied or with

reference to the time for which the penalty is to be levied. It is in this background of the true nature and scope of section 24(3) that we must now

turn to the challenges to the constitutional validity of section 24(3) of the Act.

The attack on the validity of section 24(3) is primarily on the ground that a proceeding for penalty being of a quasi-judicial nature and the

penalty not being attracted automatically, there has to be an opportunity given to the defaulting assessee to show that the default was not wilful and

the absence of a provision for such an opportunity u/s 24(3) necessarily makes the provision void. Now undoubtedly, the levy of penalty is a

quasi-judicial function and this proposition can hardly be disputed in view of the decisions of the Supreme Court in the context of penalty : vide

Commissioner of Income Tax, West Bengal I, and Another Vs. Anwar Ali, , Anantharam Veerasinghaiah and Co. Vs. Commissioner of Income

Tax , Andhra Pradesh, and Shiv Dutt Rai Fateh Chand and Others Vs. Union of India (UOI) and Another, .

The last one was a decision under the Central Sales Tax Act, in which the Supreme Court pointed out that the default committed by the dealer

should be established at an enquiry after giving the dealer concerned an opportunity of being heard and that the degree of remissness involved in

the default is a relevant factor to be taken into account while levying penalty. Mr. Kannan who cited these decisions has also referred us to a

decision of the Full Bench in Thvl. Kathiresan Yarn Stores, Salem Vs. The State of Tamil Nadu, in which the Bench has taken the view that the

power to impose penalty u/s 12(3) of the Tamil Nadu General Sales Tax Act prior to its amendment by Act 31 of 1972 has to be exercised with

proper judicial discretion and it can be exercised only in cases of wilful non-disclosure intended to evade tax.

The argument in substance was that, since no opportunity was provided and no enquiry was also contemplated, section 24(3) must be treated

as a confiscatory provision and this argument was also advanced by Messrs. Natarajan, Vijayaraghavan and Bhaskaran. Apart from the decisions

referred to earlier, heavy reliance was placed on the decision of this Court in A.M. Sali Maricar and Another Vs. Income Tax Officer and

Another, cited supra and in Mrs. Maneka Gandhi Vs. Union of India (UOI) and Another, . The argument that section 24(3) is confiscatory in

character must, however, be rejected in view of the fact that we have construed the provision in section 24(3) as not being confiscatory but

compensatory in character as held by the Supreme Court in Khazan Chand and Others Vs. State of Jammu and Kashmir and Others, . The

argument before us throughout proceeded on the footing that section 24(3) was a provision which dealt with penalty in the strict sense of the term,

and on that basis does not now survive, we do not think that it is necessary to deal with the arguments which are advanced on the footing that

section 24(3) is a penal provision as is generally understood. We might, however, mention that the decision in A.M. Sali Maricar and Another Vs.

Income Tax Officer and Another, to which we have already referred was expressly in respect of a provision dealing with penalty, and that decision

will show that section 140A(3) was held to be invalid and confiscatory, because it was found to be violative of article 19(1)(f) of the Constitution

of India and was not saved by article 19(5). The Division Bench noticing the well-established proposition that tax laws are subject to fundamental

rights under article 19 of the Constitution went on to observe at page 125 that the power to levy penalty u/s 140A(3) is very wide and enables levy

of penalty even in cases where the delay in payment was bona fide or due to inability or other good reasons and the amount of penalty is also not

made dependent on the amount of tax payable or the length of time of the delay. It is necessary to point out that penalty was construed by the

Division Bench as liability which arose because of the contumacious or fraudulent conduct of the assessee and the view taken was that mere failure

to pay tax is not an offence. The Division Bench observed at page 127 :

It is the intent to defraud that attracts liability to penalty. The fraudulent evasion creates a right to the Government to claim damages.

The learned Judges also found :

... The penalty levied u/s 140A(3) of the Act is not compensatory for delayed payment or retention of tax. In the guise of a deterrent provision for

enforcing payment of tax due and payable, section 140A(3) authorises confiscation of property. Confiscation of property for non-payment in time

of a tax ascertained and payable is an unreasonable restriction on the fundamental right to property of an assessee.

These observations will show that the foundation of the decision was the conclusion that section 140A(3) violated the fundamental right in article

19(1)(f) of the Constitution and the provision was not saved by article 19(5). Article 19(1)(f) is since deleted. This is sufficient to distinguish the

decision of the Division Bench.

When heavy reliance was placed by Mr. Natarajan on certain observations of the Supreme Court in Mrs. Maneka Gandhi Vs. Union of India

(UOI) and Another, , the learned Advocate-General has referred us to the observations made therein at page 629 and the contention raised by

him was that, if an enactment or a provision of law was within the legislative competence of the State Legislature and it did not violate any of the

provisions of Part III of the Constitution of India, no provision therein can be struck down on the ground that it did not contemplate an opportunity

to show cause against the proposed action. The learned Advocate-General contended that in such a case, the relevant provision has to be

construed in consonance with the requirement of natural justice and if the nature of the enquiry contemplated by the said provision necessitated

compliance with the principles of natural justice then such a requirement must be read in the statutory provision itself. In Mrs. Maneka Gandhi Vs.

Union of India (UOI) and Another, , the Supreme Court observed at page 629 as follows :

Now, it is true that since the right to prior notice and opportunity of hearing arises only by implication from the duty to act fairly, or to use the

words of Lord Morris of Borth-y-Gest, from ''fair play in action'', it may equally be excluded where, having regard to the nature of the action to be

taken, its object and purpose and the scheme of the relevant statutory provision, fairness in action does not demand its implication and even

warrants its exclusion ...

The learned Advocate-General has also relied on a decision of the Supreme Court in Union of India (UOI) Vs. Col. J.N. Sinha and Another,

wherein in paragraph-7 of the judgment, the Supreme Court observed as follows :

..... It is true that if a statutory provision can be read consistently with the principles of natural justice, the Courts should do so because it must be

presumed that the Legislatures and the statutory authorities intend to act in accordance with the principles of natural justice. But, if on the other

hand, a statutory provision either specifically or by necessary implication excludes the application of any or all the rules of principles of natural

justice then the Court cannot ignore the mandate of the Legislature or the statutory authority and read into the concerned provisions the principles

of natural justice. Whether the exercise of a power conferred should be made in accordance with any of the principles of natural justice or not

depends upon the express words of the provision conferring the power, the nature of the power conferred, the purpose for which it is conferred

and the effect of the exercise of that power.

The learned Advocate-General, therefore, contended that if section 24(3) is properly read, since any action thereunder does not involve penal

consequences, there was no question of natural justice or an opportunity to show cause being extended because the assessee knows that he has

not deposited the tax, and in case he has deposited beyond the prescribed time, then he known when he has deposited, and he knows the amount

which he was required to deposit, because on assessment, a notice has already been issued to him. Therefore, it was contended that the liability

being absolute and merely in the nature of compensatory payment for retaining what rightly belongs to the State, no further enquiry was necessary

and no notice need be issued. Thus, according to the learned Advocate-General, the assessee cannot challenge the notices of demand or the

demand for interest on the ground of violation of principles of natural justice. The alternative argument was that, if at all the principles of natural

justice have to be complied with, then such a requirement on the part of the assessing authority must be read into the section itself.

We have already taken the view that the payment provided for by section 24(3) is compensatory in character and is not penal in nature. If

payment demanded u/s 24(3) is not a penalty as general understood, then in our view, no question of affording any opportunity for hearing of the

defaulting assessee arises. This is also the view which the Supreme Court has taken on the provision u/s 8(2) of the Jammu and Kashmir General

Sales Tax Act in a decision rendered earlier in Royal Boot House and Others Vs. State of Jammu & Kashmir and Others, where the question was,

when a tax which was payable along with the quarterly return is not paid and a dealer is required to pay interest for the delayed payment, whether

a notice was necessary. We have already quoted section 8(2) of the Jammu and Kashmir General Sales Tax Act earlier. Section 8(3) of the

Jammu and Kashmir General Sales Tax Act which dealt with the tax payable with the quarterly return reads as follows :

...... Quarterly tax shall be paid before furnishing a quarterly return but not later than the date prescribed under sub-section (2) of section 7.

Dealing with this provision and the contention that only when a notice of demand was issued to the dealer by which, the dealer is required to pay

the tax due on the basis of quarterly return, and if that is not complied with, interest becomes payable by the dealer, the Supreme Court observed

as follows :

........ This argument is contrary to the language of provisions of sub-section (3) which provides that tax due on the basis of quarterly return shall

be paid before the expiry of the last date of filing such return and the amount of tax thus becomes payable at the latest from the expiry of the last

date of filing quarterly return. Hence under sub-section (2) the dealer would be liable to pay interest on the amount of such tax from the date when

it was payable, i.e., from the expiry of the last date of filing quarterly return of the Act. Of course, sub-section (2) refers to the notice of demand

but that obviously relates to sub-section (1) where notice of demand is required to be issued after the assessment of tax is completed and the

amount of tax assessed becomes due only after the issue of notice of demand as provided in sub-section (1) but there is no such requirement in the

case of payment of tax due on the basis of quarterly return to be filed by the dealer. It is solely governed by sub-section (3). Where the tax due on

the basis of quarterly return is not paid before the expiry of the last date of filing such return under the Act, it is not necessary to issue any notice of

demand but on the default being committed the default becomes liable to pay interest under sub-section (2) on the amount of such tax from the last

date of filing quarterly returns prescribed under the Act.

This decision of the Supreme Court is clear authority for the proposition that where the liability is absolute and tax is not paid from the date on

which it becomes due, no notice is further necessary to the dealer because the statutory provision itself fastens the liability. Section 24(3)

determines the quantum of interest and the rate at which interest is to be paid and no discretion is left to the authority to relieve the defaulting dealer

of the liability u/s 24(3). Consequently, in our view, the requirement of natural justice must be expressly held to be excluded by the provision u/s

24(3) of the Act.

The learned Advocate-General has also referred us to two decisions in which a similar provision was construed. The first one is a decision of

this Court in Abdul Rahim v. Deputy Commercial. Tax Officer [1965] 16 STC 290. This decision dealt with section 24(3) of the Madras General

Sales Tax Act, 1959 in which the Bench took the view that levy of penalty by way of interest must be considered as treating the penalty as a

liquidated sum for damages for the period for which the State is kept out of the money to which it is entitled. In Burmah Shell Oil Storage and

Distributing Co. of India Ltd. Vs. The Sales Tax Officer and Others, , a Division Bench of the Kerala High Court was concerned with section

23(3) of the Kerala General Sales Tax Act, 1963. Section 23(3) was analogous to section 24(3) of the Madras Act and it reads as follows :

(3) If the tax assessed or any other amount due under this Act or an instalment thereof is not paid by any dealer or other person within the time

specified therefore in the notice of demand or in the order permitting payment in instalments or within the time allowed for its payment by the

appellate or revising authority, the dealer or other person shall pay, by way of penalty, in the manner prescribed, in addition to the amount due, a

sum equal to -

(a) half per cent. of such amount for each month or part thereof for the first three months after the date specified for its payment;

(b) one per cent. of such amount for each month or part thereof subsequent to the first three months aforesaid.

Before the Kerala High Court, one of the contentions raised was that the imposition of penalty was a quasi-judicial act, where the discretion vested

in the officer should be properly exercised after giving the person an opportunity to be heard and there should have been mens rea for the

imposition of penalty. That contention was rejected and it was observed as follows :

.... The language of section 23(3) appears to make the payment contemplated by the section an absolute liability on the assessee. If the tax

assessed is not paid within the time allowed, whatever be the reason for the non-payment, the dealer or other person shall pay, by way of penalty,

in the manner prescribed, in addition to the amount due, a sum equal to half per cent. of such amount for each month or part thereof, for the first

three months, and one per cent. of such amount for each month or part thereof, subsequent to the three months. There is no question of the taxing

authority exercising any discretion under the statute; no discretion is contemplated or vested in the authority; the penalty at the particular rate

mentioned in the section automatically clinches on the failure to pay the amount within the time mentioned in the section. If there is no discretion left

in the assessing authority by the statute itself, there is no question of the exercise of discretion being quasi-judicial and no question of giving notice

to the assessee before the exercise of discretion. As we have stated already, the penalty is in the nature of interest by way of damages payable on

the defaulted amount at the particular rate mentioned in the section itself ..... Looking at the case, once again, from the angle of natural justice, we

would point out that the statutory provision, we mean section 23(3), excludes the application of the rules of natural justice, and in such cases, we

cannot ignore the mandate of the Legislature; and mandate of the Legislature is clear in the language of the section; we cannot read into the

concerned provision the rules of natural justice; that will not be consistent with the language of the section : vide Union of India (UOI) Vs. Col.

J.N. Sinha and Another, .

Rejecting the argument that there should have been mens rea, the learned Judges observed as follows at page 435 :

We have already stated that, u/s 23(3), there is no discretion vested in the taxing authority. If so, even if we construe the penalty under the section

as a criminal imposition (which, we confess, we are not able to do) still the language of the section makes it abundantly clear that the intention of

the Legislature was to make it an absolute liability without any mens rea. In other words, the language of the section will make it clear that the

presumption that every offence should have the requisite guilty mind is excluded or ousted ...

Mr. Kannan''s argument that section 24(3) must be held to be void because it does not provide for a right of appeal must also be rejected.

Undoubtedly, in Kunnathat Thathunni Moopil Nair Vs. The State of Kerala and Another, , section 5-A of the Travancore-Cochin Land Tax Act,

1955 as amended by Act 10 of 1957 was held to be invalid and one of the grounds for such invalidity given was that there was no right of appeal

provided to the assessees as may feel aggrieved by the order of assessment. Firstly, the absence of right of appeal itself can never result in

invalidity of a provision of law creating a liability unless it is shown to contravene any of the provisions of Part III of the Constitution. Secondly, the

absence of right of appeal was found of some importance in that case because an assessment had to be made before the tax could be paid and

against such assessment, there was no forum where the challenge to the assessment could be canvassed.

28-A. In passing, it may be mentioned that there is revisional jurisdiction under the Act in section 33 which appears to us to be sufficiently wide to

cover a case where the grievance can be made against an order against which an appeal has not been provided. The power of revision of the

Deputy Commissioner vested u/s 33 is, in our view, sufficient to enable any assessee who is aggrieved by a wrong levy of interest, whether with

reference to the amount of tax or with reference to the period for which the tax was not paid, to canvass such a grievance before the Deputy

Commissioner u/s 33. In such a proceeding, the scope will be extremely limited and the only question which will have to be determined is whether

interest has been levied on the correct amount and for the correct period. When a grievance was made before us by the learned counsel for the

assessees that the revisional jurisdiction was not being exercised by the Deputy Commissioner on the ground that an order made u/s 24(3) could

not be subjected to the revision, the learned Advocate-General promptly conceded that the correct position of law would be that if a grievance is

to be made against a demand u/s 24(3), the correctness of that could be canvassed u/s 33. There is thus no doubt now that revisional jurisdiction

of the Deputy Commissioner is available to a dealer, who may be aggrieved by the demand u/s 24(3).

Mr. Natarajan has placed reliance on the decision of the Supreme Court in Kanti Lal Babulal Vs. H.C. Patel, . In this decision, the Supreme

Court held that section 12A(4) of the Bombay Sales Tax Act was held to be void because the power conferred under the section was unguided,

uncanalised and uncontrolled and was an arbitrary power being violative of article 19(1)(f) of the Constitution. The question which has arisen

before us was not the question which arose before the Supreme Court. In any case, it has to be pointed out that a similar provision u/s 37 of the

Bombay Sales Tax Act, 1959 was held to be valid in R.S. Joshi, Sales Tax Officer, Gujarat and Others Vs. Ajit Mills Limited and Another, on the

view that the infirmity on account of which a similar section was struck down in Kanti Lal Babulal Vs. H.C. Patel, was now remedied. Section

37(1) also dealt with forfeiture and was punitive in nature. But the Supreme Court took the view that article 19(1)(f) could not be availed of

because the absence of a procedural requirement which was found in Kanti Lal Babulal Vs. H.C. Patel, had been made good in the 1959 Act. In

the instant case, there was no question of the provisions of section 24(3) being void on the ground of violation of any part of article 19 of the

Constitution of India.

The argument of Mr. Ramachandran that section 24(3) suffers from legislative competence must stand rejected in view of the decision of the

Supreme Court in Khazan Chand and Others Vs. State of Jammu and Kashmir and Others, . That section 24(3) was violative of article 14 of the

Constitution of India was also canvassed by Messrs. Kannan, Bhaskaran, Ramachandran and Venkatachari. The argument was that while dealing

with matters of penalty under sections 12(3), 12(5), 16(2) and 22(2) of the Act, notice is provided and an opportunity to show cause as to why

penalty should not be levied is available, but section 24(3) has been made an exception in which no opportunity is made available. Basically, as

already indicated, the liability created by section 24(3) is not in the nature of penalty, in the sense that it involves penal consequences. It is not

penalty, in the sense, that it is intended to penalise the assessee for some conduct in the form of any wilful act or omission amounting to

contravention of a statutory provision. The other provisions in sections 12(3), 12(5), 16(2) and 22(2) expressly involve a determination of whether

the omission on the part of the dealer is wilful or not. In section 12(3) which prescribes penalty and which we have reproduced earlier, clause (a)

refers to whether the turnover was not wilfully disclosed by the dealer in his return and in clause (b), the reference is to the case of wilful failure to

submit a return. The penalty which is provided by section 12(5) is also for omission to do certain things required by the statute, such as submission

of prescribed return and the return being incorrect or incomplete. Section 16(2) deals with assessment of escaped turnover and once again, the

basis of penalty is that the dealer has escaped assessment due to wilful non-disclosure of assessable turnover. Section 22(2) provides for a penalty

where the registered dealer collects any amount by way of tax or purporting to be by way of tax in contravention of the provisions of sub-section

(1), whether or not any tax is due from such person or dealer under the Act in respect of the transaction in which he collects such amount, and the

penalty can be levied only giving such person or dealer a reasonable opportunity of being heard by order in writing. Section 22(1) is a prohibition

against a person who is not a registered dealer to collect any amount by way of tax or purporting to be by way of tax under the Act. Therefore,

before the power to levy penalty under sub-section (2) of section 22 is exercised, an enquiry with regard to whether a person has collected any

amount by way of tax has to be made and that is why section 22(2) provides for a reasonable opportunity of being heard.

Invoking of article 14 must be ruled out on the short ground that sections 12(3), 12(5), 16(2) and 22(2) do not deal with situation similar to the

one covered by section 24(3). While the earlier mentioned sections refer to wilful acts or omission, section 24(3) has no relevance to wilfulness or

otherwise in not paying the tax, once it has become due and has been assessed.

Another ground on which the validity of section 24(3) has been challenged as being violative of article 14 is that for non-payment of tax, there

are two penalties prescribed, one in section 24(3) and the other in section 45(2) and there is no guideline for regulating the discretion of the taxing

authorities to decide whether they should proceed under either one or the other of these provisions. Mr. Kannan has relied upon a decision in

Anandji Haridas and Co. (P.) Ltd. Vs. S.P. Kushare, S.T.O. Nagpur and Others, . In that decision, it was found that the escaped assessment was

covered by two provisions, sections 11(4)(a) and 11(A)(1) and the view taken was that it is open to the assessing authority to proceed against the

dealers under any of those two sections; but as they were proceeded against u/s 11(4)(a), they cannot have the benefit of the period of limitation

prescribed u/s 11(A)(1). Thus it was found that section 11(4)(a) had become a discriminatory provision in view of section 11(A)(3) and was liable

to be struck down under article 14 of the Constitution of India. This result followed, according to the Supreme Court, because of sub-section (3)

in section 11(A) and if that provision was not there, there would have been no discrimination between those dealt with u/s 11(4)(a) and those u/s

11(A)(1) since the period of limitation prescribed in section 11(A)(1) would have attracted itself to proceedings u/s 11(4)(a) as held by the

Supreme Court earlier. We fail to see how this decision can be of any assistance because section 24(3) is not a penal provision at all. Section

45(2) undoubtedly provides inter alia that any person who wilfully acts in contravention of any of the provisions of the Act can be prosecuted and

can be convicted and on conviction, he would be liable to a fine which may extend to one thousand rupees and in the event of a second or

subsequent conviction, to simple imprisonment which may extend to six months or a fine which may extend to two thousand rupees or both. This

penal liability for wilful default is entirely different from a civil liability which arises out of a compensatory measure by way of payment of interest. It

is, therefore, not correct to say that two penalties, for the same act have been prescribed.

32-A. Once again founded on the provision for limitation to be found in sections 12(5), 16(1)(a) and 22(2), it is argued that no period is

prescribed for making a demand for interest u/s 24(3) and therefore, section 24(3) must be held as violative of article 14 of the Constitution of

India. This argument is canvassed by Mr. Kannan and Mr. Sukantharaj. Undoubtedly, sub-sections (3) and (5) of section 12 as well as sections

16(1)(a) and 22(2) refer to a period of five years for commencement of proceedings under those sections. Under the proviso to section 15(5), no

penalty under sub-section (3) and (5) can be imposed after a period of five years from the expiry of the year to which the assessment relates. u/s

16(1)(a) the escaped assessment has to be determined at any time within a period of five years from the expiry of the year to which the tax relates

and u/s 22(2) a proceeding under that provision cannot be commenced after a period of five years from the expiry of the year in which the amount

has been collected. There are the provisions in public interest which disable the authorities from taking steps in the nature of penal action after the

expiry of the prescribed period. Such a provision of limitation is inherently impossible in a case where the dealer is being called upon to reimburse

the State for the amount which was retained by him and possible utilised by him. The very basic condition of article 14 cannot be said to be

satisfied because the provisions once again do not deal with similar situation.

Mr. Venkatachari has contended that section 24(3) must be held to be invalid because it leaves no discretion to the taxing authorities in the

matter of levy of penalty and he has referred to the decision in Hindustan Steel Ltd. Vs. State of Orissa, in support of the argument that penalty

cannot be levied merely because it is lawful to do so. In that decision, the Supreme Court was dealing with a provision with regard to the

registration of a dealer and section 9(1) read with section 25(1)(e) of the Orissa Sales Tax Act provided for a penalty to be imposed for failure to

register as a dealer. The Supreme Court held that the liability to pay did not arise merely upon proof of default in registering as a dealer and penalty

will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or

dishonest, or acted in conscious disregard of its obligation. Then the Supreme Court observed that penalty will not also be imposed merely

because it is lawful to do so and that whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the

authority to be exercised judicially and on a consideration of all the relevant circumstances.

We have already pointed out that section 24(3) creates an absolute liability and there is no occasion to exercise any discretion by the taxing

officer. All the facts are within the knowledge of the defaulting dealer, and he cannot make any grievance of being required to compensate the

State for loss of tax occasioned by the defaulting assessee withholding payment.

34-A. Mr. Sukantharaj has argued that section 24(3) as framed is unworkable because, according to the learned counsel, there is no provision

which refers to tax becoming payable as contemplated by the amendment. As part of the same argument, the learned counsel, who argued on the

invalidity of the amended section, contended that the introduction of the word ""payable"" was intended to give effect to rule 18(3) of the Rules and

the amendment having been made, to quote his words ""to follow rule 18(3)"", the section must be held to be invalid. Now the validity of a statutory

provision can never be determined with reference to a rule, which is subordinate legislation. But the argument which is advanced before us by Mr.

Sukantharaj and other counsel necessitates at this stage to consider the scope of section 24(3), both before and after the amendment. We have

already indicated earlier the requirement of section 24(3) which in its original form refers to non-payment of ""the tax assessed under this Act or any

instalment thereof"". Section 24(3) being a machinery provision and consequential to section 24(1), it referred to ""the tax assessed under this Act

because section 24(1) referred to ""the tax assessed under this Act"" to be paid in such manner and in such instalments and within such time as may

be specified in the notice of assessment. Reading sections 24(1) and 24(3) it is clear that both these provisions contemplated a process of

assessment, i.e., actual determination of the tax payable and the tax had to be paid within the time specified in the notice of assessment.

We must first consider the provisions of rule 18(3) because one of the questions which falls for consideration in these petitions is, whether

interest can be demanded by the State, if in the case of monthly returns to be filed by the dealer, he does not either deposit the entire tax due on

the basis of the turnover as returned, or there is a shortfall in the amount of tax and that shortfall is made good later. The contention is and it seems

to be clearly borne out by the plain words of section 24(3) that the payment of tax which is to be made under rule 18(3) along with the monthly

returns is really in the nature of self-assessment and if the liability to pay interest by way of penalty is fastened only in a case where the tax assessed

is not paid within the time specified therefore in the notice of assessment there will be no question of any notice of assessment in a case which is

governed by rule 18(3) and the provisions of section 24(3) cannot be attracted to such a case. The learned Advocate-General was in considerable

difficulty when faced with this proposition, and while not disputing that there has to be an assessment and non-payment of tax within the time

specified in the notice of demand before attracting penalty u/s 24(3) and that there is no assessment in a case falling under rule 18(3), the learned

Advocate-General concluded that when a monthly return is filed under rule 18(3), there is provisional acceptance of that return and statutorily there

is a provisional assessment. The learned Advocate-General went on to argue that rule 18(3) must be read as a statutory notice of the kind referred

to in section 24(3). The contention appears to be that the assessment referred to in section 24(3) must also include the provisional assessment

which results from an acceptance of a return submitted under rule 18(3) and rule 18(3) itself must be treated as a statutory notice because rule

18(3) requires the tax due and computed by the dealer himself on the turnover returned by him to be deposited along with the monthly returns.

Rule 18(3) as a result of the amendment of the Rules in 1977 refers to a return filed in form A-1 as required by rule 18(2) and provides that this

return shall be provisionally accepted. The rule then further goes on to spell out the concept of tax becoming due as well as tax becoming payable.

The latter part of rule 18(3) says that if the return is submitted without necessary proof of payment (the proof is stated to be in the form of treasury

receipt, crossed cheque, etc.) for the full amount of tax payable after deducting therefrom the amount, if any, claimed as reimbursement or refund

due in the month under rule 23, such amount of tax shall become due on the date of receipt of the return or on the last due date as prescribed in

sub-rule (2) whichever is later, and shall be recovered in accordance with the provisions of the Act without any notice of demand to the dealer.

The scheme of rule 18(3), therefore, is that, whatever is the correct tax payable, according to the dealer, on the basis of his monthly turnover

submitted in the return in form A-1, has to be deposited along with the monthly return. If this is not done, then the amount which the dealer should

have paid is referred to as ""the amount of tax payable"". This amount of tax payable is statutorily made due on the date of the receipt of the return

or on the last due date as prescribed in sub-rule (2) whichever is later. There is, therefore, no difficulty that the tax which is payable on the basis of

the return becomes statutorily payable and it also becomes due on the date on which the return has been received or on the last due date under

sub-rule (2). The question which arises, however, is, when rule 18(3) makes the tax payable on the date of the return and tax also becomes due on

the date of the return, non-payment of the whole or part of the tax becoming payable and due under rule 18(3) will attract the provisions of section

24(3). Undoubtedly, the return has to be provisionally accepted under the terms of sub-rule (3) of rule 18, but the liability u/s 24(3) would be

attracted only if the case falls expressly within the words of section 24(3). When section 24(3) refers to a notice of assessment, that notice of

assessment is the notice which is contemplated by section 12 of the Act read with rule 16 of the Rules which refers to the making of final

assessment. This has also reference to a notice in the case of a provisional assessment in rule 15(7) and this notice has to be issued in form B.

Form B is expressly referred to as notice of provisional assessment and demand for payment of tax or taxes. Form B-1 is notice of provisional

annual demand. Form B-3 is a notice of final annual assessment and demand and is used in both the assessments, i.e., assessment covered by rule

16 as well as rule 18. Form B-4 is a notice of final assessment and demand for the purpose of rule 14. Form B-7 is a notice of revision of

assessment and demand for the purpose of rule 32 to 34. Then the notice of demand in form B-8 has to be served in the case of escaped

assessment. Therefore, when section 24(3) refers to a notice of assessment, it contemplates a positive act on the part of the assessing authority

calling upon the dealer to pay the tax which has not been paid, and it is only if in spite of such notice of assessment the amount due is not paid, the

liability to pay interest u/s 24(3) can arise. Section 24(3) being a provision which crates a fiscal liability must be strictly construed. It will not,

therefore, be possible to accept the argument of the learned Advocate-General that the notice of assessment referred to in section 24(3) must be

so read as to include within it what he described as the statutory notice arising out of the alternative mode of assessment provided by rule 18(3),

which casts an obligation on the dealer to pay the tax payable along with the monthly return. At best, rule 18(3) can be described as casting an

obligation to pay the tax which is payable according to the dealer but if the dealer has to be made liable to pay interest for a breach of that

obligation, then that cannot be done unless the case falls expressly within the four corners of section 24(3). Consequently, having regard to the

plain terms of section 24(3), any failure on the part of the dealer to pay the tax payable under rule 18(3) along with the monthly return, will not

automatically attract the liability u/s 24(3).

An exercise of amendment of section 24(3) has been gone through and as already pointed out the opening words of section 24(1) and section

24(3) now refer to ""the tax assessed or has become payable"". It is possible that the introduction of the words ""tax has become payable"" was

intended to cover cases of non-payment of tax which had become payable under the alternative method of assessment in rule 18, and with a view

to make the shortfall or tax not paid, payable with interest u/s 24(3). This object, however, does not seem to have been achieved because the

event which originally attracted the liability u/s 24(3), namely, non-payment within the time specified therefore in the notice of assessment or in the

order permitting payment in instalments has been retained as it was before. Consequently, unless it is first established that there was a notice of

assessment and there was non-payment, notwithstanding the amendment made in the opening words of section 24(3), a case of provisional

assessment under rule 18(3) will not be covered by even the amended provision. We must, therefore, hold that section 24(3) even as amended

cannot be invoked in the case of a failure of the dealer to pay either the entire of part of the tax, which, even according to him, was due on the

basis of the turnover returned by him in the monthly return.

It is undoubtedly true that though after the amendment of section 24(3) by the addition of the words ""or has become payable"" the dealer who

does not deposit the tax payable and due on the basis of the monthly return cannot be made liable for interest in respect of any short payment of

the tax but it is difficult to accept the contention of Mr. Sukantharaj that section 24(3) should be declared as unworkable. At best, the relief which

the petitioners would be entitled to, will be that, even under the amended provision, the default in complying with the provision of rule 18(3) will not

attract the provisions of section 24(3). There have been further amendments in rule 18(3). There was an amendment made in 1981 by G.O.Ms.

No. 276 dated 18th March, 1981 and the only material amendment was that in the place of the opening words ""the return so filed shall"", the words

substituted were ""the return in form A-1 so filed shall"". This is merely a consequential amendment because in the earlier sub-rules (1-A) and (2) for

the expression ""form A-2"" the expression ""form A-1"" was substituted. This change only specifies the form in which the return shall be filed. Then

after the amendment of section 24(3) with effect from 1st November, 1982 only, as already pointed out above, in addition to ""tax assessed"", the

section was made applicable to tax which has ""become payable"" and in the place of ""penalty"" the word ""interest"" was substituted, rule 18(3) was

amended, which again was not a very substantial amendment, because instead of enumerating the documents which evidence payment of tax such

as ""treasury receipt, crossed cheque,"" etc., the words substituted in the second sentence of rule 18(3) were ""proof of payment as specified in sub-

rule (1) of rule 55"". This amendment came into effect on 30th December, 1982 and rule 18(3) as it stands today reads as follows :

The return in form A-1 so filed shall, subject to the provisions of sub-rule (4), be provisionally accepted. If the return is submitted without proof of

payment as specified in sub-rule (1) of rule 55 - (these are the words introduced by the amendment) - for the full amount of tax payable after

deducting therefrom the amount, if any, claimed as reimbursement or refund due in the month under rule 23, such amount of tax shall become due

on he date of receipt of the return or on the last due date as prescribed in sub-rule (2) whichever is later, and shall be recovered in accordance

with the provisions of the Act without any notice of demand to the dealer.

Even this amendment is innocuous for the purpose of giving effect to the amendment made in the substantive provision in section 24(3). Therefore,

notwithstanding these amendments in rule 18(3) and section 24(3), we must hold that section 24(3) cannot be attracted in a case in which the tax

was required to be deposited in accordance with rule 18(3) in the case of monthly return in form A-1. Since we have taken this view and section

24(3) does not operate in a case governed by rule 18(3), the question of section 24(3) being void because as contended by the counsel it is made

to be in conformity with rule 18(3), cannot be accepted.

Mr. Sukantharaj then contended on a construction of section 24(3) that once instalments are granted by the Government, all the earlier defaults

are wiped out and no interest is payable u/s 24(3) for the period earlier to grant of instalments. We have tried to find in the Act or the Rules the

power of the Government to grant instalments. It is conceded on behalf of all concerned that though the Government has been granting instalments

for payment of sales tax dues, there is no such power either in the Act or the Rules. The only power to grant instalments is to be found in the notice

of provisional assessment and demand for payment of tax or taxes issued in Form B which must be read with rules 13 and 15. This form inter alia

provides :

.... The tax for the months preceding the date of notice date shall be paid within thirty days from the date of service of this notice. The tax for the

months preceding the date of service shall be paid within thirty days from the date of service of this notice or on or before the 10th day of the next

month whichever is later and the tax for each of the remaining months on or before the 10th day of the succeeding month ....

Apart from this form, neither the learned counsel for the petitioners nor the Government is able to point out any express provision vesting the

power to grant instalments in the State Government. Apart from this, it is difficult to see how if the instalments are granted after a default has been

committed, the earlier default is wiped out. On the terms of section 24(3), the starting point of the liability to pay interest is expressly specified and

section 24(3) cannot be set at naught merely by asking for instalments and having them granted. Once the liability created u/s 24(3) is incurred,

then the running of interest can be arrested only if the payment of the tax due and payable is made. That is the only circumstances which can arrest

the operation of section 24(3). It is not, therefore, possible to accept the contention that once instalments are granted, the earlier liability incurred

u/s 24(3) is wiped out.

An argument was advanced by Mr. Kannan that it is only for the first time by introducing section 24(4) the State Government became liable to

pay interest in case the tax paid is found to be excess on final assessment or revision or reassessment, or as a result of an order passed in appeal,

revision or review. u/s 24(4), such excess if not refunded to the dealer within a period of ninety days from the date of the order of assessment or

revision of assessment or order passed in appeal, revision or review, the Government is obliged statutorily to pay by way of interest where the

amount refundable is not less than one hundred rupees, a sum equal to a sum calculated at the rate of one per cent. or part thereof of such amount

for each month or part thereof after the expiry of the said period of ninety days. The argument is that since this amendment came for the first time

by Act 22 of 1982 with effect from 1st November, 1982 the State Government was not entitled to ask the defaulting dealers to pay interest. The

absence of a provision in the case of section 24(4) prior to 1st November, 1982 does not create infirmity in the constitutional validity of section

24(3). It is valid on its own strength and does not depend for its validity on the obligation now cast on the State Government to refund excess

recovery with interest.

An argument was also advanced that there is no outer limit to the liability u/s 24(3) and that there may be cases where the penalty will be in

excess of the actual tax due. As observed by the Supreme Court in Khazan Chand and Others Vs. State of Jammu and Kashmir and Others, , the

doctrine of damdupat in Hindu law does not apply to tax legislation. If a defaulting dealer is required to pay an amount by way of interest more

than the actual tax it is because of his own default. It is for him to cut short his period of liability; his default and prolonged delay in payment cannot

provide a ground for invalidating section 24(3) of the Act.

An argument was advanced that section 24(3) treats differently assessees who are covered by rule 18(3) and rule 18(4). The argument is that

a dealer who defaults in payment of tax due under rule 18(3) is required to pay interest without any notice of demand while a dealer whose case is

covered by rule 18(4) becomes liable to pay interest only after there is an order of provisional assessment and notice of demand. Therefore,

according to the learned counsel section 24(3) must be treated as violative of article 14 of the Constitution of India. Since we have already held

that the liability to pay interest is not automatically created in the case of a dealer who submits a return under rule 18(3) but does not deposit the

entire amount of tax due from him, there is no occasion to consider the argument whether dealers who fall within rule 18(3) are treated differently

than those who fall within rule 18(4).

The last contention which is advanced before us and which needs to be considered is that even for delay of one or two days interest for the

entire month is sought to be recovered and that such recovery is not justified by section 24(3). This argument is advanced by Messrs.

Subramaniam, Natarajan, Kannan and Bhaskaran. Now on the terms of section 24(3), it is clear that the taxing authorities are entitled to recover

interest only for the actual period of delay in making payment. While specifying the rate of interest of 2 per cent. of the amount of tax assessed, the

Legislature has clearly directed that the penalty shall be ""for each month or part thereof after the date specified for its payment"". If the Legislature

wanted that interest should be payable for the entire month following the default irrespective of the fact that tax is paid at any time before the expiry

of the month, then the words ""or part thereof"" would not have been used by the Legislature. The provision would have been something akin to the

used by the Legislature. The provision would have been something akin to the provision in section 8 of the Jammu and Kashmir General Sales Tax

Act, where the explanation is added in section 8(2) which reads as follows :

Interest shall be charged for full month and not for a part of the month.

The use of the words ""part thereof"" specifically used in section 24(3) would clearly show that the Legislature intended that interest would be

payable for the actual period of delay. Thus if the delay is one month and ten days, the interest payable will not be for two months, but it will be

only for one month and ten days. Even the instructions issued by the Government in Commercial Taxes Manual (1979 Edition) at page 52 show

that while charging interest only the actual number of days of delay is to be taken into account. The taxing authorities are, therefore, not justified in

construing section 24(3) as authorising them to recover interest for the entire period of the month during which the payment has been made.

Having considered in detail all the arguments advanced before us, we must, therefore hold :

(1) Section 24(3) of the Act is constitutionally valid.

(2) Interest u/s 24(3) of the Act does not automatically become payable in the case of a dealer who has not deposited the entire tax which is

payable by him on the basis of monthly return submitted as required by rule 18(3) where the dealer opts for an alternative mode of assessment

provided by rule 18.

(3) The liability to pay interest u/s 24(3) of the Act is automatic and no enquiry or hearing is necessary before the liability under that section is

enforced.

(4) The demand for interest can be challenged by invoking the revisional jurisdiction u/s 33 of the Act.

(5) In a case where interest is demanded u/s 24(3) of the Act interest is payable only for the actual period of delay.

Accordingly, the following cases which challenge the validity of section 24(3) only must stand dismissed and they are accordingly dismissed :

W.P. Nos. 3160 of 1982, 297 of 1983, 298 of 1983, 299 of 1983, 300 of 1983, 9541, of 1982, 9931 of 1982, 7653 of 1983, 10496 of 1982,

12113 of 1983, 243 to 245 of 1984, 8034 of 1983, 10402 of 1983, 9994 of 1983, 10424 of 1983, 892 of 1984, 11207 of 1983, 11868 of

1983, 11869 of 1983, 10350 of 1982, 119 of 1984, 120 of 1984, 921 of 1984, 8410 of 1981, 11126 of 1981, 667 of 1982, 780 of 1982,

6150 of 1981, 8921 of 1981, 467 of 1982, 5877, 5878 of 1983 and W.A. Nos. and 174 to 176 of 1982, 182 of 1982, 600 of 1981 and 671 of

1982.

The following cases wherein monthly returns have been filed under rule 18(3) and demands have been made, those demands will have to be

quashed and they are accordingly quashed :

W.P. Nos. 7792 of 1983, 7793 of 1983, 7794 of 1983, 8906 of 1983, 9916 of 1983, 9917 of 1983, 9918 of 1983, 12004 of 1983, 12005 of

1983, 12006 of 1983, 427 to 434 of 1984, 435 to 439 of 1984, 800 to 802 of 1984, 1448 of 1984, 2993 of 1982, 9340 of 1983, 9341 of

1983, 10703 of 1983, 10704 of 1983, 11612 of 1983, 11613 of 1983, 4535 of 1983, 8773 of 1983, 649 to 651 of 1984, 870 of 1984, 1434

of 1984, 5108 of 1982, 5109 of 1982, 5689 to 5691 of 1982, 5879 of 1982, 5928 of 1982, 5929 of 1982, 7179 of 1982 and 8405 of 1982

and W.A. Nos. 10 of 1982, 177 of 1982, 183 of 1982, 184 of 1982 and 687 of 1982 and W.P. Nos. 6753 of 1981.

Similarly, the following petitions wherein apart from the challenged to section 24(3), demands had been made for interest by dealers who have

given returns under rule 18(3), those petitioners are partly allowed to the extent that the demands are quashed and the petitions are rejected partly

in so far as the challenge to the constitutional validity of section 24(3) is concerned :

W.P. Nos. 3176 of 1982, 3092 of 1982, 3093 of 1982, 310 of 1982, 311 of 1983, 8867 of 1983, 10995 of 1983, 10996 of 1983, 7908 to

7910 of 1983, 9009 of 1983, 9547 to 9553 of 1982, 12026 to 12028 of 1983, 6636 to 6645 of 1982, 10184 of 1983, 9931 of 1983, 8619 of

1982, 5673 of 1983 and 9074 of 1983.

In so far as W.P. No. 2993 of 1982 wherein interest has been demanded for the entire month for which tax has been paid during the course of the

said month, the demand is quashed and the matter is remanded back to the appropriate authority for computing the interest payable in accordance

with our decision rendered above.

W.P. No. 11202 of 1983 : Counsel for the petitioner states that the matter has become infructuous. Hence this petition is dismissed as infructuous.

No costs.

W.A. No. 1030 of 1984 : In view of the decision rendered in the above cases, W.P. No. 6320 of 1984 itself is allowed and this appeal is

infructuous.

We may make it clear that we have decided these matters only on legal issues with regard to the validity of section 24(3) and the scope of rule

18(3) of the Rules. Any rejection of the cases of the respective petitioners does not affect the merits of the contentions which they have raised or

they are entitled to raise in such proceedings as may be pending either in this Court or before any other authorities.