COMMISSIONER, SALES TAX Vs. KOTHARI CHEMICALS

JUDGEMENT

(1.) These are two revisions filed by the Commissioner of Sales Tax against the order of Tribunal dated September 18, 1990 relating to assessment year 1982-83 both under the U. P. Sales Tax Act, 1948 as well as under the Central Sales Tax Act, 1956.

(2.) The dealer-opposite party was carrying on the business of pan masala. For the month of May, 1982, dealer had filed monthly return both under the U.P. Sales Tax Act as well as under the Central Sales Tax Act as required under Rule 41 and deposited the admitted tax by cheque along-with return on June 29,1982. It appears that the cheque was not presented in the bank up to July 21,1982 and on July 22,1982, Income-tax department had attached the bank account of the dealer which was released on July 29, 1982. It appears that the cheque was presented with the bank during the period July 22,1982 to July 29,1982 and the same was dishonoured. Dealer on receipt of an information that the cheque was dishonoured, deposited the admitted tax on July 30, 1982 by pay order. Later on, the assessing authority issued notice directing the dealer to deposit interest on the admitted tax under Section 8(1) for late deposit of tax, inasmuch as, tax was due to be deposited on June 30, 1982 while it was deposited on July 30, 1982. Dealer filed two appeals before the Deputy Commissioner (Appeals) which were rejected. Dealer filed two second appeals before the Tribunal which were allowed and being aggrieved by the orders of the Tribunal, the present two revisions have been filed.

(3.) I have heard the learned Standing Counsel and Sri P. Agarwal, counsel appearing on behalf of dealer-opposite party. The Tribunal had held that the demand of interest by the assessing authority was not justified. It had been held that the amount was deposited on June 29, 1982 by cheque along with the return and the said cheque was not presented in the bank up to July 21, 1982 and further on July 22, 1982, the Income-tax raid was conducted and the bank account was seized on July 22,1982 and when the bank account was released on July 29, 1982, dealer deposited the amount by way of pay order on July 30, 1982. The Tribunal observed that the assessing authority had not held that the dealer failed to pay the admitted tax along with the return without reasonable cause or payment was not made due to the cause which was not reasonable and the assessing authority had not recorded any finding that there was any mala fide on the part of the dealer. The Tribunal further observed that since the dealer had deposited the cheque for the month of May, 1982 on June 29, 1982 along with return and position of credit balance in the bank account at the time of seizure on July 22, 1982 was Rs. 8,12,042.01 for the encashment of the aforesaid cheque. In the opinion of the Tribunal, the payment when made was a valid discharge of the amount, due against it as there was money available in the bank account and the cheque was dishonoured because income-tax raid was conducted on the appellant-firm and the bank account was seized on July 22, 1982 under the orders of Commissioner, Income-tax, Kanpur, hence, no interest could have been charged from the payment. Learned Standing Counsel submitted that for the charge of interest under Section 8(1), consideration of mala fide or reasonable cause as considered by the Tribunal, was not relevant. He submitted that the payment by cheque was conditional payment subject to its encashment and since the cheque was not encashed, it could not be treated as deposit as on June 29, 1982 when the cheque was given. According to him, deposit should be treated to have been made on July 30,1982 which was admittedly beyond the prescribed time and hence, interest under Section 8(1) was chargeable. Learned Counsel for the dealer-opposite party submitted that the view of the Tribunal was correct and in support of it, he cited a Division Bench judgment of this court in the case of Baldeo Prasad Sita Ram, Kanpur v. State of Uttar Pradesh,1992 87 STC 245.