SUPREME COURT OF INDIA

Before:- S. P. Bharucha and S. Rajendra Babu, J.

Appeal Civil 13193 -13214 Of 1996. D/d. 1.12.1998.

Commissioner Of Sales Tax - Appellant

Versus

Hindustan Aluminium Corporation - Respondent

Uttar Pradesh Sales Tax Act, 1948, Sections 8(1), (1-A), (1-B) and (1-C) - Interest - Liability of, on additional tax, impermissibility - Assessment years (AYs) 1975-81 - Assessee paying sales tax on his admitted turnover - Dispute as to classification of products of assessee - Higher rates of tax claimed by Revenue - Dispute resolved in favour of Revenue - Assessee paying difference within about 12 days of such resolution - Case of Revenue that interest is payable by assessee under Section 8(1) from the date of filing of returns on the differential amount - Held, interest cannot be levied in respect of a dispute such as a classification dispute which is resolved only by assessment.

[Paras 2, 3 and 5]

JUDGMENT

S. P. Bharucha, J. - . Section 8 of the U.P. Sales Tax Act, 1948 so far as it is relevant, reads thus :

"Section 8. Payment and recovery of tax.--(1) The tax admittedly payable shall be deposited within the time prescribed or by the thirty first day of August, 1975, whichever is later failing which simple interest at the rate of two per cent per mensem shall become due and be payable on the unpaid amount with effect from the day immediately following the last date prescribed till the date of payment of such amount and nothing contained in Section 7 shall prevent or have the effect of postponing the liability to pay such interest.

Explanation.--For the purposes of this sub-section, the tax admittedly payable means the tax which is payable under this Act on the turnover of sales or, as the case may be, the turnover or purchases, or of both, as disclosed in the accounts maintained by the dealer or admitted by him in any return or proceeding under this Act, whichever is greater, or, if no accounts were maintained then according to the estimate of the dealer and includes the amount payable under Section 3-B or Sub-section (6) or Section 4-B.

(1-A) The tax assessed under this Act shall be deposited in the manner specified in and within thirty days of the service of the notice of assessment and demand.

(1-B) If the tax [other than the tax admittedly payable to which Sub-section (1) applies], assessed, reassessed or enhanced by any authority or court remains unpaid for three months after expiration of the period specified in the notice of assessment and demand simple interest at the rate of one and half per cent per mensem on the unpaid amount calculated from the date of such expiration shall become due and be payable : Provided that the amount of interest under this sub-section shall be recalculated if the amount of tax is varied on appeal or revision or by any order of a competent court or authority.

(1-C) The amount of interest payable under sub-sections (1), (1-B) and (2) shall be without prejudice to any other liability or penalty that the dealer may incur under this Act or under any other law for the time being in force, and shall be added to the amount of tax and be also deemed for all purposes to be part of the tax."

2. The assessment years in question in these appeals are A.Y. 1975 to 1981. The assessee-respondent paid sales tax on its admitted turnover. There was a dispute as to the classification of its products, the Revenue claiming that higher rates of tax were applicable thereto. The dispute was ultimately resolved against the assessee by this Court. Within about 12 days of such resolution, the assessee paid the difference between the tax payable at the higher rate and that already paid.

3. It is the case of the Revenue that interest is payable by the assessee under Sub-section (1) of Section 8 from the date upon which its returns were filed until the date upon which the differential amount of tax was paid. The Sales Tax Tribunal upheld the case of the Revenue. The High Court overturned the Tribunal's judgment. The Revenue is in appeal by special leave.

4. What is required is a plain interpretation of the provisions of Section 8. Sub-section (1) thereof requires the assessee to deposit within the time prescribed or by 31st August, 1975, whichever is later, the tax that is admittedly payable by him. What "tax admittedly payable" means, for the purpose, is set out in the Explanation to Sub-section (1). It means the tax payable under the Act on the assessee's turnover as disclosed in his accounts or as admitted by him in his return or other proceeding under the Act, whichever is greater, or, if no accounts are maintained, according to his estimate. Sub-section (1-A) deals with the post-assessment scenario. It says that the tax assessed under the Act shall be deposited within 30 days of service of notice of assessment and demand. Sub-section (1-B) applies if the tax assessed is not deposited as required by sub-section (1-A).

5. The dispute here, as aforestated, was in regard to the classification of the assessee's products. Such classification dispute is ordinarily resolved in assessment proceedings and, if resolved against the assessee, the assessee has to make payment of the differential amount of tax as required by Sub-section (1-A) failing which the provisions of Sub-section (1-B) apply.

6. The requirement of Sub-section (1) is that the assessee must pay tax on the amount of his turnover as particularised in the Explanation thereto. Interest under the provisions of Sub-section (1) " cannot be levied in respect of a dispute such as a classification dispute which is resolved only by the assessment. Sub-section (1) has no application to such a situation.

7. Having regard to the conclusion that we reach upon the plain words of Section 8, it is unnecessary to go into the assessee's contention that a substantial part of the amount claimed by the Revenue as and by way of interest is under the provisions of the Central Sales Tax Act, 1956 and under that Act no interest is leviable.

8. The appeals are dismissed. No order as to costs.

.