Madon, J. - (1.) This group of Writ Petitions and Appeals by Special Leave challenges the constitutional validity of sub-secs. (1), (2) and (3) of Sec. 8 of the Jammu and Kashmir General Sales Tax Act, 1962 (J and K Act XX of 1962) and seeks to quash the orders directing the Petitioners and Appellants before us (thereinafter for the sake of brevity referred to as "the Assessees") to pay interest on the amount of tax due according to the quarterly returns filed by them but not paid within the prescribed time.
(2.) All the Assessees are registered as dealers under the Jammu and Kashmir General Sales Tax Act, 1962 (hereinafter referred to as "The Act"). Sub-sec. (1) of Sec. 7 of the Act requires every dealer liable to pay tax under the Act to furnish in the prescribed form a return of his turnover for a year within 120 days from the expiry of that year. Sub-section (2) of Sec. 7 provides as follows:- "Without prejudice to the provisions of sub-sec. (1), every dealer shall also furnish in the prescribed form quarterly returns for each quarter of the year within thirty days from the expiry of that quarter. Every such return shall be accompanied by a Treasury Receipt or any other proof of having paid the tax due on that return." Thus, the tax due according to a quarterly return is to be paid by the dealer before filing such return and proof of payment of the tax so due is to accompany such return. Sub-secs. (1), (2), (3), (7) and (8) of Sec. 8 omitting what is not relevant for our purpose, provide as follows:- "(1) The tax assessed, or any other amount demanded, under this Act shall be paid in such manner and within such time not being less than fifteen days from the date of the notice of demand, as may be specified in the notice. In default of such payment the whole of the amount then remaining due shall become recoverable in accordance with Secs. 16 and 16-A. ********** (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 month; (b) If the default is for a period exceeding three months but less than six months at 2% per month: (c) If the default is for a period exceeding six months at 3% per month:- Provided that where, as a result of an order under Secs. 11, 12, 24 or an order of the Court, the amount of tax or other sum on which interest was payable under this sub-section has been reduced, the interest shall be reduced accordingly and excess interest paid, if any, shall be refunded. Explanation - Interest shall be charged for full month and not for a part of the month. (3) Quarterly tax shall be paid before furnishing a quarterly return but not later than the date prescribed under sub-section (2) of Sec. 7. ********** (7) where a dealer furnishes a revised return under sub-sec. (4) of Sec. 7 and the tax payable is more than the tax paid on the basis of original return, he shall pay the extra tax payable before furnishing the revised return:- Provided that if the tax already paid is in excess of the tax payable, such excess amount shall be treated to have been paid towards the tax payable for the quarter next following the date of furnishing such revised return. (8) Notwithstanding anything contained in this Act, if a dealer fails to pay the tax payable under this Section, the provisions of sub-sec. (2) of this Section, Sec. 16 and Section 16-A shall apply mutatis mutandis to the recovery thereof. Explanation (1)- Quarterly tax means the tax payable on the basis of a quarterly return required to be furnished by sub-sec. (2) of Sec. 7. Explanation (2)- Interest under sub-sec. (2) of this Section on the extra tax payable on the basis of revised return shall be payable from the date next following the date on which the tax was payable on the basis of original return."
(3.) The Assessees filed their quarterly returns within the time prescribed by the Act but without paying the tax due according to such returns. Some of them also filed revised returns thereafter. The tax due was paid by the Assessees after several months and in some cases by instalments. In a few cases, the full amount of tax was not paid even by the date the assessment order in their cases came to be made. In the cases of most of the Assessees, the Assessing Authority levied penalty under sub-section (2) of Section 8 of the Act before making any assessment. In other cases, orders requiring interest to be were made along with the assessment orders. It may be mentioned that in cases where the assessment orders were made, the returns filed by the Assessees were accepted as correct. Those Assessees who are Appellants before us filed writ petitions in the Jammu and Kashmir High Court challenging the validity of Section 8 of the Act under which interest was sought to be recovered from them as also the demand for payment of interest. These writ petitions were heard along with other writ petitions in which other questions arose. The High Court dismissed all these writ petitions but made no order as to the costs thereof.;