R.M.Sahai, J. - (1.) In these petitions directed against levy of interest under the Sales Tax Act, the primary controversy centres round the interpretation of the expression "tax admittedly payable under the Act" in Sub-section (1) of Section 8 introduced since 1975. Imposition of interest in fiscal statutes, in recent years is a normal feature to compensate the revenue for its loss due to delayed payments on one pretext or the other. In the Sales Tax Act it was introduced for the first time in 1964 when Sub-section (1-A) was added to Section 8 providing for payment of interest if tax assessed, reassessed or enhanced remained unpaid for six months from the date of service of notice of demand. While considering this provision the Honourable Supreme Court in Haji Lal Mohd. Biri Works v. State of U. P. 1973 UPTC 690 (SC) observed : The above provision was apparently added with a view to tighten up the machinery for collection of sales tax and as a deterrent measure so that the dealers may not evade or delay the payment of tax.
(2.) With increase in rate of tax and growth in volume of business the tendency of withholding tax realised from customers on behalf of the Government, of which the dealer thus became custodian only, increased and it began to be utilised as capital for as long as possible either under the cover of disputed tax or in lieu of stay orders granted by this Court, State Government or authorities under the statute itself. In order to curb this tendency and tighten the collection machinery further Sub-sections (1) and (1-A) of Section 8 were substituted by Sub-sections (1), (1-A), (1-B) and (1-C) of Act 23 of 1975. In order to understand the scheme of payment of interest since 1975 and appreciate the rival submissions made by the learned counsel for the parties, Sub-sections (1), (1-A) and (1-B) as far they are relevant are extracted below: 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 for every month or part thereof shall become due and be payable on the unpaid amount with effect from the day immediately following the last date prescribed or with effect from the first day of June, 1975, whichever is later 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 of 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 are maintained, then according to the estimate of the dealer. (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 assessed, reassessed or enhanced by any authority or court remains unpaid for three months after the expiry of the period specified in the notice of assessment and demand or from the date of the order of enhancement, as the case may be, simple interest on the unpaid amount shall become due and be payable as hereinafter specified (i) on the amount referred to in Sub-section (1), at the rate specified in that sub-section; and (ii) on the amount, if any, in excess of that referred to in Sub-section (1), at the rate of one and one half per cent for every month or part thereof : Provided that (a) ...
(3.) Interest is now payable both before and after assessment. For the former liability accrues under Sub-section (1) if the dealer fails to deposit tax admittedly payable within the time specified or 31st August, whichever is later. What is tax admittedly payable has been explained in the explanation and it means "tax payable under the Act on turnover of sales or purchases". After assessment if tax assessed, reassessed or enhanced is not paid within three months of the period specified in the notice of demand the dealer becomes liable to pay interest on tax admittedly payable at two per cent and on balance at one and half per cent. The retention of distinction between tax admittedly payable and tax in excess in sub-clauses (i) and (ii) of Sub-section (1-B) even after assessment and levy of interest on the former at higher rate makes it necessary to examine the meaning of the expression "tax payable under the Act". An attempt was made on behalf of the petitioner to equate it with "tax admitted" in the proviso to Section 9 and it was urged that the interpretation given by this Court in Commissioner of Sales Tax v. Bishambhar Dutt Mohan Lal 1979 UPTC 801 should be applied and the expression should be understood in the same sense. The learned counsel relied on similarity of language in the two sub-sections and placed the following comparison : Explanation to Section 8(1).-...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 of purchases, or of both...admitted by him in any return or proceeding under this Act, whichever is greater, ... Proviso (a) to Section 9(1).-...the amount of tax or fee due under this Act on the turnover of sales or purchases, as the case may be admitted by the appellant in the returns filed by him or at any stage in any proceeding under this Act, whichever is greater.;