Full Text
JUDGMENT
M/S. MOHAN HOTEL P. LTD. ...... PETITIONER
Vs
COMMISSIONER OF SALES TAX ..... RESPONDENT Advocates who appeared in this case:
For the Petitioner : Mr. M.S. Syali, Sr. Advocate with Mr. Rahul Sateeja & Mr. D.V. Kapoor, Advocates
For the Respondent: Mr. H.C. Bhatia, Advocate
HON'BLE MR JUSTICE RAJIV SHAKDHER
1. Whether the Reporters of local papers may be allowed to see the judgment ? Yes
2. To be referred to Reporters or not ? Yes
3. Whether the judgment should be reported Yes in the Digest ? RAJIV SHAKDHER, J
1. This is a reference made on behalf of the assessee. The captioned reference pertains to the assessment years 1984-1985 to 1989-1990. The Appellate Tribunal, Sales Tax, Delhi (hereinafter, referred to as the Tribunal) has referred to this court, for adjudication, the following questions of law:- 2011:DHC:3128-DB str2-02 “(i). Whether on the facts and under the circumstances of the case, the Tribunal was correct in holding that the „delivery order‟ issued by the dealer is not a document of title and therefore, the case of the appellant does not fall under the second limb of section 5(1) of the Central Sales Tax Act, 1956? (ii). Whether on the facts and under the circumstances of the case, the Tribunal was correct to hold that the second limb of the aforesaid section 5(1) pre-supposes foreign destination of the goods? (iii). If the answer to both the aforesaid questions is in the negative, whether on the facts and under the circumstances of the case the Tribunal was correct in upholding levy of interest under Section 27(1) of the Delhi Sales Tax Act, 1957 read with Section 9(2A) of the Central Sales Tax Act, 1956?”
2. The aforementioned questions of law arise in the background of the following facts:- 2.[1] The assessee/dealer is engaged in the business of supplying meals, snacks and other eatables to foreign airlines in respect of flights operated by them from India. As per the case set up by the assessee/dealer before the authorities below, the eatables (hereinafter referred to as „goods‟) supplied by it to the airlines were not to be consumed by passengers within the territory of India. The assessee/dealer in this behalf, amongst other documents, had relied upon a delivery order, which contained the following terms and conditions:str2-02
str2-02 2.[2] Based on the above, the assessee/dealer contended that the goods in issue were exempt from local Sales Tax being sales „in the course of export‟.
3. An argument was raised that the assessee‟s/dealer‟s sale came within the ambit and scope of the second limb of section 5(1) of the Central Sales Tax Act, 1956 (hereinafter referred to as „CST Act‟) which reads as follows:- “A sale or purchase of goods shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India.” (Emphasis is ours)
4. The Assessing Officer for each of the assessment years referred to above, came to the conclusion that the sale took place in Delhi, more specifically at the Delhi Airport, and since delivery was also made at Delhi; sale in issue had to be considered as a local sale. Accordingly, the assessee was directed to pay sales tax at the rate of 7% even in respect of this transaction. 4.[1] Aggrieved by the order, the assessee/dealer carried the matter in appeal to the Dy. Commissioner (Appeals). The Dy. Commissioner (Appeals) passed two separate orders dated 04.10.1991 and 28.03.1994 in respect of the assessment year 1984-1985 and assessment years 1985-1986 to 1989-1990 respectively. The Dy. Commissioner (Appeals) sustained the view str2-02 taken by the Assessing Officer by a reasoned order. In coming to the conclusion, which he did, the Dy. Commissioner (Appeals) applied the ratio of the judgment of the Supreme Court in Burmah Shell Oil Storage and Distribution Company (1960) (11) STC 764 and, that of the Andhra Pradesh High Court in the case of M/s. Fairmacs Trading Co. Vs. State of Andhra Pradesh 36 STC 260 (AP). 4.[2] Being aggrieved, the assessee/dealer carried the matter in a further appeal to the Tribunal. The Tribunal by a common order dated 02.02.2001 dismissed the appeals, being six (6) in number, preferred by the assessee/dealer. The Tribunal for the reasons contained in the impugned judgment repelled the contention of the assessee that the case of the assessee/dealer fell within the second limb of section 5(1) of the CST Act, which provided that sale or purchase of goods shall be deemed to take place in the course of export of the goods, out of the territory of India, only if the sale or purchase is effected by „transfer of documents of title to the goods after goods have crossed the customs frontiers of India‟. 4.[3] The argument advanced on behalf of the assessee was that the delivery order, to which we have already made a reference above, is a document of title and that this document of title effects sale by transfer after the goods have crossed the customs frontiers of India. While rejecting this submission, the Tribunal in the impugned judgment has made the following observations on the merits of the assessee‟s/dealer‟s contention that its case fell within str2-02 the scope and ambit of the second limb of section 5(1) of the CST Act:-
5. The Tribunal having rejected the assessee/dealer‟s contention on merits, proceeded to examine the contention of the assessee/dealer with regard to payment of interest. It is pertinent to note at this stage the arguments advanced by the assessee/dealer on the issue of interest. As would be evident from submissions noted in paragraph 19 of the impugned judgment, that the assessee/dealer‟s stand was that the interest was not leviable since the issue of imposition of local tax on sales of goods in issue to the airlines was a debatable issue.
5.[1] The Tribunal, however, relying upon its own judgment in the case of Phillips India and Convest Ltd. 35 DSTCJ 24, which was evidently approved by this court (the details of which neither the assessee/dealer nor the revenue have been able to supply), rejected the contention of the assessee/dealer. In applying the str2-02 principle as articulated in the judgment of the Supreme Court in J.K. Synthetics Ltd. Vs. Commercial Taxes Officer (1994) 94 STC 422, it noticed the following facts in paragraph 22 of the impugned judgment. Based on the observations contained therein, the Tribunal, came to the conclusion that the assessee/ dealer was liable to pay interest under section 27(1) of the Delhi Sales Tax Act, 1975 (hereinafter referred to as „DST Act‟) on the ground that it would be difficult to say that the assessee/dealer had filed a true and complete return under a bonafide belief. The observations made in paragraph 22 being important for purposes of adjudication of the captioned reference are extracted hereinbelow:-
str2-02
6. The assessee/dealer not being satisfied with the impugned judgment, filed a review petition with the Tribunal, which was dismissed by an order dated 25.05.2001. 6.[1] Being aggrieved, the captioned reference came to be filed, in the aforesaid circumstances.
7. Before we proceed further, it would be important to note that in so far as question nos.(i) and (ii) are concerned, the same are no longer res-integra as is conceded by the learned counsel for the assessee/dealer in view of the judgment of the Division Bench of the Bombay High Court in the assessee‟s/dealer‟s own case titled Narang Hotels and Resorts Pvt. Vs. State of Maharashtra and Others (2004) 135 STC 289. This judgment was delivered on 09.10.2003. Against the said judgment, a Special Leave Petition was filed. On leave being granted, it was converted into a civil appeal bearing no.1944/2004. The said civil appeal was dismissed as withdrawn vide order dated 03.11.2004. The assessee/dealer evidently chose to withdraw the civil appeal on the ground that it was desirous of availing benefit of an amnesty scheme introduced by the State of Maharashtra. We have not been told as to whether or not the assessee/dealer obtained any benefit under the Amnesty Scheme.
8. In view of the aforesaid circumstances, the arguments before us were advanced by both parties only with respect to question no.(iii). We are thus called upon to examine the scope and ambit of section 27(1) of the DST Act. On behalf of the assessee, str2-02 arguments were put forth by Mr. Syali, senior advocate assisted by Mr. Rahul Sateeja and Mr. D.V. Kapoor, advocates, while on behalf of the revenue, submissions were made by Mr. H.C. Bhatia. 8.[1] It was submitted by Mr. Syali that no interest could be levied in the circumstances obtaining in the present case as interest was leviable under section 27(1) only if „tax due‟ under section 21(3) of DST Act was not paid. According to Mr. Syali, section 21(3) mandates payment of tax „according to such return‟ filed by the assessee/dealer. The return being true and complete, no interest could be levied by the revenue. It was submitted that tax determined on completion of assessment cannot be equated with tax paid by the assessee/dealer as per the return filed by him as long as the return filed was true and complete. It was submitted, in this connection, that a perusal of the assessment orders passed would show that in none of the orders passed, the Assessing Officer had made any adverse comments on the return filed; the returns filed were acted upon and accepted; and finally there is no penalty imposed on the assessee, even as of today, on the ground of either having filed a false or a fraudulent return. In other words, it was submitted that, tax having been paid on the turnover disclosed in the return, no interest could be levied based on the assessed turnover.
8.2. In connection with the above, the learned counsel took us through the scheme of the Act and in particular referred to the str2-02 following provisions, apart from provisions of sections 27(1) and 21(3), to establish the sustainability of his arguments. The provisions referred to were: section 25, which relates to payment and recovery of tax; section 55 which pertains to imposition of penalty, interalia, for failure to pay tax under section 21(3); section 56 (1) which relates to penalty for concealment or furnishing inaccurate particulars; and lastly, section 50(f) which provides that furnishing false return would be construed as an offence.
8.3. According to Mr. Syali, non-payment of tax as per the return filed by the assessee would lead to imposition of tax and penalty. If, however, the return filed is found to be false on completion of assessment, it would lead to not only imposition of interest and penalty but also prosecution under the relevant provisions of the DST. The consequences of the infractions, according to him, are distinct and separate and hence, do not overlap.
8.4. Mr. Syali also submitted that if interest is imposed in the manner as contended by the revenue, it would render it penal in character; a construction which is not warranted by the scheme of the DST Act. In support of his submission, reliance was placed on the following judgments: Pratibha Processors Vs. UOI (1996) 11 SCC 101 @ 109 para 13; and Bhai Jaspal Singh Vs. CCT (2011) 1 (SCC) 39 @ 53 paras 36-38
8.5. Apart from the above, it was contended that the facts obtaining in the present case were squarely covered by the str2-02 judgment of the Supreme Court in the case of J.K. Synthetics (supra) which dealt with pari-materia provisions contained in section 11(b) of the Rajasthan Sales Tax Act. The learned counsel laid stress on the observations made by the court at page 438 which read as follows: “it is difficult on the plain language of the section to hold that the law envisages the assessee to predict the final assessment and expect him to pay the tax on that basis to avoid the liability to pay interest. That would be asking him to do the near impossible.” 8.[6] In other words, it was contended that interest could not be imposed on the difference obtaining between the assessed and the returned turnover and that too from the date of filing of the return. Interest, if any, could be charged 30 days from the date of assessment / demand. Taking cue from the observations made by the Supreme Court in J.K. Synthetics (supra), reliance was also placed by learned counsel on the judgment delivered by Justice Bhagwati (as he then was) in the case of Associated Cement 48 STC 466. It is important to note that this was a minority view which was upheld by a larger bench of the Supreme Court in J.K. Synthetics (supra). Apart from the above, reliance was also placed on the following judgments:- (i).Frick India Vs. State of Haryana 95 STC 188 (PB pages 35-36) Constitution Bench; (ii). EID Parry (India) Ltd. Vs. Asst. CCT (2005) Head Notes, 141 STC 12@ 24 para 14; and (iii). Maruti Wire Industries Vs. STO (2001) 3 SCC 735. str2-02
8.6. In addition to the above, the learned counsel also submitted that the Bombay High Court by an interim order dated 05.12.1988 passed in WP(C) No.2939/1988, (which as noticed hereinabove, was finally disposed of on 09.10.2003) directed stay on collection and recovery of tax from the assessee/dealer, in respect of flight kitchen sales, pursuant to assessment orders dated 19.11.1987 and 04.01.1988, and also with regard to levy and collection of tax on assessee/dealer‟s flight kitchen sales to foreign airlines. The learned counsel submitted that the interim protection continued till 09.10.2003 when, final judgment in the matter was delivered by the Bombay High Court. It was contended that since the dismissal of the writ petition by the Bombay High Court, the assessee has been paying local Sales Tax with effect from January, 2004 even on flight kitchen sales made to foreign airlines. This position according to the learned counsel obtains even with respect to tax imposed pursuant to the aforementioned assessment orders.
9. As against this, Mr. Bhatia who appeared for the revenue submitted that the question that arises for consideration of this court is: as to whether the assessee/dealer was liable to pay interest in terms of section 27(1) of the DST Act on failure of the assessee/dealer to pay the full amount of tax due in respect of sales made to foreign airlines, which were at every given point in time, local sales. Mr. Bhatia contended that payment of interest str2-02 got triggered immediately on the failure of the assessee/dealer to pay tax due as required under sub-section(3) of section 21 of the DST Act. Section 21(3) of the DST Act requires payment of full amount of tax due by the assessee/dealer under the said Act, according to the return filed. The provisions of section 21(5) of the DST Act read with rule 21(1) of the Delhi Sales Tax Rules, 1975 (in short, „Rules‟) require that every return filed should be in the prescribed form being: Form ST-11. The said form of the return requires the assessee to set out, amongst others, the particulars of its turnover, mandating verification by the assessee, on solemn affirmation that the particulars contained therein are true and correct to his best knowledge and belief. Therefore, a conjoint reading of sections 27(1), 21(1) and 21(5) of the DST Act alongwith Rule 21(1) and Form ST-11 make it abundantly clear, according to the learned counsel, that the tax due required to be deposited by the assessee/dealer in consonance with the return filed, must be that tax, which is calculated and deposited, on the basis of a return, which is, true and correct. The learned counsel submitted that if the information submitted in the return was not true and correct, a dealer under the Act cannot be said, to have deposited, the full amount of tax due resulting in the dealer becoming liable for interest. In this regard, the learned counsel drew our attention to the following observations made by the Supreme Court in the case of J.K. Synthetics (supra): str2-02 “Therefore, on a conjoint reading of section 7(1), (2) and (2A), rule 25, the information to be furnished under form ST 5 and the form of verification, it becomes clear that the dealer must deposit the full amount of tax due on the basis of information furnished, which information must be correct and complete to the best of the dealer‟s knowledge and belief without he being guilty of willful omission. If the dealer has furnished full particulars in respect of his business, without willfully omitting or withholding any particular information which has a bearing on the assessment of tax, which he honestly believes to be „correct and complete‟, it would be difficult to hold that the dealer had not acted bonafide in depositing the tax due on that information before the submission of the return.”
9.1. Relying upon the aforesaid observation, Mr. Bhatia thus contended that it could not be said that in the instant case the assessee/dealer had filed a true and correct return if regard is had to the following facts:- (i). by an order dated 01.06.1977, the Commissioner of Sales Tax in the case of East India Hotels had rendered an advance ruling holding supply of food items by East India Hotels to British Airways Plc was a local sale and not a sale in the course of export; (ii). the assessee itself had been paying tax on such sales to Airlines upto Assessment Years 1984-1985; and (iii). the assessee in order to give the transaction a colour of an export sale contrived a delivery order knowing fully well that the transaction in issue was otherwise a local sale. str2-02
9.2. In support of the aforementioned contentions, the learned counsel also relied upon the observations made in the impugned judgment of the Tribunal in paragraph 11, 20, 21 and 22 and those made in the judgment of the Bombay High Court in assessee‟s own case in paragraph 113, 114 and 116. 9.[3] Mr. Bhatia in order to buttress his submissions relied upon the following judgments:- (i). Calcutta Jute Manufacturing Co. and Another Vs. Commercial Tax Officer and Others (1997) 106 STC 433 (SC); (ii). Commissioner of Trade Tax, U.P. Lucknow Vs. Manisha Export (2008) 11 VSTC 918 (All.); and (iii). Hindustan Heavy Chemicals Ltd. and another Vs. Commercial Tax Officer and Others (1997) 106 STC 74 (WBTT)
10. Having heard the learned counsel for the parties and perused the record, it would be important to first, briefly, advert to certain provisions of the Act in so far as they are relevant for the purposes of rendering our opinion qua question (iii) referred to us for adjudication. 10.[1] Sub-section (1) of Section 3 of the DST Act interalia provides that every dealer who at the commencement of the Act, is registered or is liable to pay tax under the CST Act, shall be liable to pay tax under the DST Act on all sales effected by him on or after such commencement. Section 3 is the charging section which determines the incidence of the tax. Therefore, ordinarily str2-02 after the commencement of the DST Act tax is payable on all sales. 10.[2] The provisions with regard to filing of returns, assessment, recovery and refund of tax are contained in section 21. 10.[3] Sub-section (1) of section 21 provides that tax payable under the DST Act shall be paid in the manner hereinafter provided, at such intervals, as may be prescribed. Sub-section (2) requires every “registered dealer” and “every other dealer” who may be so required by the Commissioner by notice served on him to do so furnish “such returns” of turnover by such dates and to the authority as prescribed. Sub-sections (3) and the relevant portion of sub-section (5) of section 21 of the DST Act being crucial to the controversy at hand, we propose to extract the same verbatim to the extent relevant for our purposes:- “21(3). Every registered dealer required to furnish returns under sub-section (2) shall pay into a Government Treasury, or the Reserve Bank of India or in such other manner as may be prescribed, the full amount of tax due from him under this Act according to such return, and shall where such payment is made into a Government Treasury or the Reserve Bank of India furnish along with the return a receipt from such Treasury or bank showing the payment of such amount.” (Emphasis is ours) “21(5). Every return under this section shall be signed and verified …..“ str2-02 10.[4] At this juncture, it may also be relevant to refer to Rule 21(1). The said Rule reads as follows:- “Every registered dealer shall furnish returns in Form ST- 11 quarterly, within thirty days from the expiry of each quarter:..” 10.[5] Section 22 of the DST Act interalia provides that no person who is not a registered dealer shall collect any amount by way of tax under the DST Act in respect of sale of goods by him in Delhi. Furthermore, a registered dealer is obliged to collect tax only in accordance with the provisions of the Act and the Rules contained thereunder. 10.[6] Section 23 of the DST Act prescribes the mode and manner of the assessment. In particular, sub-section (2) of section 23 provides that if the Commissioner is satisfied that the returns furnished in respect of any period are “correct” and “complete”, he shall assess the amount of “tax due” from the dealer on the basis of “such return”. Sub-section(3)(a) provides that if the Commissioner is not satisfied that the returns furnished in respect of any period are correct and complete, the Commissioner is empowered to issue notice requiring the presence of the dealer and production of evidence in support of the return filed. Under clause (b) of sub-section (3) of section 23, the Commissioner is empowered after considering all evidence which may be produced before him to assess the amount of “tax due” from the dealer. In case where the dealer fails to furnish a return, the Commissioner is str2-02 empowered, after giving the dealer a reasonable opportunity of being heard, to make a best judgment assessment. 10.[7] Where the Commissioner has reasons to believe that a whole or a part of the turnover of the dealer in respect of any period has escaped assessment or has been assessed at a lower rate then the rate at which it is assessable or any deduction has been wrongly made therefrom, he is empowered to serve a notice and proceed to determine the amount of „tax due‟ from the dealer according to his best judgment under section 24 of the DST Act, bearing in mind the time frame provided in clause (a) and (b) of sub-section (1) of the said section. 10.[8] The payment and recovery of taxes is provided in section 25. 10.[9] Section 27 of the DST Act which provides for levy of interest in certain situations, is extracted hereinafter, to the extent necessary, for the sake of convenience, being directly in issue: “If any dealer fails to pay the tax due as required by subsection (3) of section 21, he shall, in addition to the tax (including any penalty) due, be liable to pay simple interest on the amount so due at one per cent per month from the date immediately following the last date for the submission of the return under sub-section (2) of the said section for a period of one month, and at one and a half per cent per month thereafter for so long as he continues to make default in such payment or till the date of completion of assessment under section 23, whichever is earlier.” str2-02
11. A reading of the aforesaid provisions emphasizes the fact that the assessee/dealer is required to file a return which is verified and signed by the dealer. Form ST-11 requires the assessee/dealer to disclose his gross turnover as well as his taxable turnover based on which the calculation of sales tax for the prescribed period is made. The assessee being a registered dealer is required to pay the „full amount of tax due‟ from him under the DST Act in accordance with the provisions of sub-section (3) of section 21. A perusal of the provisions referred to above also shows that expression “tax due” and “such returns” are used by the legislature to ensure that the concerned assessee/ dealer files “such return” which is “complete” and “correct”. A harmonious reading of provisions of Section 21(3), 23(2) and 27(1) make that abundantly clear. 11.[1] The issue which thus arises for consideration is whether the full amount of tax due from the dealer (i.e., the assessee) according to “such return” would mean any and every return filed by the assessee. 11.[2] The liability to pay interest under section 27(1) of the DST gets triggered immediately upon the failure of the dealer to pay tax due in accordance with such return under the provisions of sub-section (3) of section 21. It is the contention of the learned counsel for the assessee that section 27(1) will get triggered only if tax is not paid by the assessee/dealer in accordance with str2-02 turnover disclosed in the return. This argument is buttressed with the submission that there was no finding that the return contained false or incomplete particulars. In other words, the mere failure on the part of the assessee to include flight kitchen sales made to foreign airlines, did not constitute filing of an incomplete and/or untrue return. As a sequitur to this submission, it was contended that merely because the Bombay High Court had come to a conclusion in Oct. 2003 that flight kitchen sales made to foreign airlines constituted a local sale, its exclusion from the gross turnover in respect of the assessment year in issue could not be construed, as if, the assessee had filed an incomplete or untrue return. In effect the contention was that interest could not be imposed on the difference between the assessed and the returned turnover. As noticed above, Mr. Syali in this regard, had placed a reliance on the judgement of the Supreme Court in the case of J.K. Synthetics (supra) which was followed in Frick India and EID Parry (supra).
13. In our view, the contention of the learned counsel, in the facts and circumstances arising in this case, is misconceived. The reason being that the judgment of the Supreme Court in J.K. Synthetics (supra) dealt with a situation where the court was called upon to consider as to whether interest could be levied on the failure of the assessee to pay tax on freight which, pursuant to the decision rendered by that court in an earlier round had been str2-02 declared as forming part of the price of the goods in issue (i.e., cement) and hence, amenable to sales tax. The Supreme Court in the said case has decidedly observed that the dealer is obliged to file a full and complete return. In this regard the assessee/ dealer is required to make an honest effort to file a “correct” and “complete” return. Therefore, the issue at hand is not whether interest can be levied on the difference between assessed and returned turnover but whether the turnover disclosed in the facts and circumstances of a case is complete and correct. In this regard, each case will turn on its own facts.
14. In the instant case, the facts disclosed clearly demonstrate that the assessee failed to declare correct and complete particulars in respect of its turnover in the return filed for the relevant assessment years. This is evident from the fact that the assessee failed to take into account the advance ruling delivered by the Commissioner of Sales Tax on 01.06.1977, in the case of East India Hotel Ltd., and the fact that uptill assessment years 1984-1985, the assessee had included flight kitchen sales as part of its turnover, and consequently, paid local sales tax on even this part of the transaction. 14.[1] Therefore, the mere fact that the assessee/dealer configured a delivery order (which was a document generated inter-partes only with a view to exclude the flight kitchen sales made to airlines from gross turnover) would not have us hold that the str2-02 assessee/dealer furnished full, correct and complete particulars in the return filed for the assessment years in issue. This could not have been more starkly brought out than by the observation made by a Division Bench of the Bombay High Court in the assessee/dealer‟s own case [i.e., Narang Hotels & Resorts (supra)] in paragraph 110, 111, 112, 113 and 114. Some of these observations, being pertinent, are extracted hereinbelow:
15. The Supreme Court in the case of Calcutta Jute Manufacturing case (supra) considered a similar situation. The brief facts of the case were as follows:str2-02 15.[1] The assessee had laid a challenge to a new provision [i.e., Section 6B] inserted in the Bengal Finance Sales Tax Act, 1941 (in short the „Bengal act‟) which, interalia, imposed an obligation on the dealer to pay tax if his annual aggregate gross turnover exceeded Rs.50 Lakhs. 15.[2] The constitutional validity of this provision, was challenged by way of a writ petition filed in the Calcutta High Court. 15.[3] In the interregnum, the Government of West Bengal introduced yet another provision in the Bengal Act being: section 10A which, required interest to be paid at the rate of 2% p.m. on the tax amount payable by the dealer during the period of default. The relevant portion of section 10A which the court was called upon to consider reads as follows:- “Section 10A - Interest payable by dealer – (1) where a registered or certified dealer furnishes a return referred to in section 10 in respect of any period by the prescribed date or thereafter, but fails to make full payment of tax payable in respect of such period by such prescribed date, he shall pay a simple interest at the rate of two per centum…” (Emphasis is ours) 15.[4] Pending adjudication in the writ petition the Calcutta High Court granted an injunction in favour of the assessee/dealer, whereby the Government of West Bengal was restrained from collecting tax recoverable on insertion of Section 6B in the Bengal Act. The writ petition, however, finally came to be dismissed. str2-02 15.[5] The question which arose for consideration was whether the assessee/dealer had furnished a full and accurate return as the tax paid obviously did not take into account the impact of the provisions of section 6B of the Bengal Act. 15.[6] It was argued on behalf of the assessee/dealer that they had furnished complete and accurate returns and paid full tax as per such returns and hence, were not liable to pay interest under section 10 A of the Bengal Act. It was also argued that there could be no liability on the assessee/dealer to pay interest on the tax payable as there was in operation an injunction order granted by the Calcutta High Court. 15.[7] The Supreme Court while repelling the submissions made on behalf of the assessee/dealer made the following crucial observations as contained in paragraphs 6, 7 and 8 of the judgment.
16. On a reading of judgment of the Supreme Court in Calcutta Jute Manufacturing Company (supra), it is quite clear that any and every challenge to the imposition of tax cannot bring the dispute into an arena of a debatable issue. Each case, as is observed, hereinabove by us, will turn on its own facts. In the instant case, as noticed by us hereinabove, the assessee was aware of not only the advance ruling rendered by the Commissioner of Sales Tax in the case of East India Hotels Ltd. but had also been paying local sales tax on flight kitchen sales made to foreign airlines till assessment year 1984-1985. The fact that such sales were amenable to tax was also known to the petitioner in view of the principle laid down by the Supreme Court in the case of Burmah Shell (supra). The assessee/dealer only to get over the impediment caused by the principle laid down in the judgment of the Supreme Court in the case of Burmah Shell (supra) configured a delivery order so as to contend that the sale of goods was effected by transfer of documents of title in goods only after the goods have crossed the customs frontiers of India.
17. Therefore, in our opinion, interest will be leviable under section 27(1) of the DST Act read with section 21(3) if full amount of tax due has not been paid by the dealer/assessee as per return which is both correct and complete. The correctness and completeness of the return and the bonafide of the str2-02 assessee/dealer would have to be ascertained in the facts and circumstances of each case. It is not as if any and every return filed by an assessee/dealer would result in obviating the liability to pay interest as imposed under section 27(1) read with section 21(3) of the DST Act. If it is found, in the facts and in the circumstances of a case that the return filed is not complete and correct, the liability to pay interest on the full amount of tax due will run from the date on which such a return ought to have been filed. The necessary consequences of this will be that even though the liability towards interest is ascertained when tax is assessed, it will run from the date on which such correct and complete return ought to have been filed. In that sense, Mr. Syali‟s argument that interest cannot be imposed on the difference between assessed and the returned turnover, is in our opinion, misconceived.
18. The argument of Mr Syali that since an interim order operated the assessee/dealer could not be said to have filed an incomplete or incorrect return is misconceived. The court‟s final judgment delivered on 09.10.2003 declared the true effect of the document, i.e., the delivery order when it was first generated. The principle is that a judgment would declare the effect of document on the date it got executed. The pronouncement of a judgement by the court relates back to that date unless it is specifically stated to the contrary. str2-02
19. We do not propose to burden our judgment with analysis of the ratio laid down in various other cases cited before us, as according to us, the principle laid down in J.K. Synthetics Ltd. (supra) on which great emphasis was laid by both counsel, is the common thread which runs through almost all judgments cited before us. Therefore, in our opinion, while the principle enunciated in J.K. Synthetics Ltd. (supra) is applicable it would not result in saving the assessee/dealer from its liability qua imposition of interest under section 27(1) of the DST Act given the fact situation which obtains in the present case.
20. For the foregoing reasons, the question of law is thus answered in the affirmative and against the assessee.
21. The reference is disposed of accordingly. Costs shall follow the result.
RAJIV SHAKDHER, J SANJAY KISHAN KAUL,J JUNE 03, 2011 yg