ONKARMAL NANAKRAM Vs. COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) Doubting correctness of decision rendered by a Division Bench of this Court in M/s. Ajanta Enterprisers v. State of Orissa and Anr. : 7994 (II) OLE. 463, this reference has been made to the large Bench to consider the effect of Sec. 14 -C of the Orissa Sales Tax -Act, 1947 (in short the 'Act') relating to date from which higher rate of interest as stipulated under the provision is applicable. As dispute revolves round interpretation of Sec. 14 -C of -the Act, reference to factual aspects is not necessary.

(2.) SEC . 14 -C, the pivotal provision, reads as follows : '14 -C. Payment of interest on refundable amount - Amount refundable Under Section 14, if not refunded within ninety days from the date of receipt of the application in that behalf from the dealer, shall carry i'nterest at the rate of eighteen per cent per annum from the first ninety days and thereafter at the rate of twenty four per cent per annum, with effect from the date of expiry of the period specified above.' Dispute is the date from which interest is payable by the Revenue, and whether ninety days' time provided for disposal of the application for refund is to be excluded and whether no interest is payable for the said period, even if the application for refund is not disposed of within that period.

(3.) PROVISION of Sec. 14 -C as substituted by Act 23 of 1983 with effect from 12.8.1983 has been quoted above. Dispute can be looked into from the angle as to whether there are three periods involved, i.e., (a) first ninety days during which refund application has to be disposed of, (b) further ninety days period carrying interest at the rate of eighteen per cent; and (c) the period thereafter carrying interest at the rate of twenty four per cent. This according to the Revenue is the time scheme. According to petitioner, there is no logic in excluding first ninety days. Mr. Lai, learned counsel for the Revenue to substantiate his argument submitted that in a given case if refund application is disposed of on ninetieth day, no interest is payable. Lesser rate of interest is provided for ninety days thereafter with a view that refund application if not disposed of within ninety days shall carry some interest! Stringency in the interest rate is introduced in case of failure to pay even after ninety days period during which a lesser rate of interest is prescribed. Reference is also made to Sec. 13(6) of the Act which deals with rate of interest payable by the assessee in case of failure to pay tax demanded in terms of notice of demand Under Section 13(4) of the Act. Sec. 13(6) to which reference has been made by learned counsel for the Revenue reads as follows : - - - - '(6) In case a dealer makes default in payment of any amount for the payment of which a notice has been issued under Sub - sec. (4), by the date of expiry of the period allowed under that sub -section he shall pay interest on the said amount at the rate of eighteen per cent per annum from the said date for the first three months and thereafter at the rate of twenty four per cent per annum : Provided that where any appeal or revision Under Section 23 or reference Under Section 24 has been preferred, the interest as aforesaid shall be payable from the date specified above on the tax or penalty, if any, ultimately found due from the dealer : Provided further that in case the tax or penalty, if any, is enhanced in such appeal, revision or reference, the interest on the excess amount shall be payable from the date by which the dealer is required to pay such excess amount : Provided also that no interest under this sub -section shall be charged in respect of any amount which remained unpaid at any time prior to the 1st day of January, 1971.'