BUL CHAND Vs. STATE OF RAJASTHAN

JUDGEMENT

(1.) THE petitioner, who is the proprietor of M/s. All Fruit Juice, Sojatigate, Jodhpur, has filed this writ petition challenging the three notices issued to him under section 17 (3) of the Rajasthan Sales Tax Act (No. 29 of 1954) (hereinafter referred to as "the Act"), by the Assistant Commercial Taxes Officer, Ward-I, Circle-A, Jodhpur (for short "the A. C. T. O. "), relating to assessment years 1972-73 to 1976-77. THEse notices are dated 28th July, 1985, and have been marked exhibit 5 to exhibit 7.

(2.) THE facts leading to this writ petition briefly stated are : that the petitioner is doing the business of selling fresh fruits and fresh fruit juice since 1972. He was advised that no sales tax is leviable on the sale of fresh fruits and fresh fruit juice. However, the A. C. T. O. (respondent No. 2) called upon the petitioner to seek registration of his firm under the Act vide his order dated 31st May, 1974. THE petitioner contested the claim of respondent No. 2 but respondent No. 2, however, ordered that the petitioner is liable to registration under section 16 (1) (a) read with section 6 (1) of the Act. THE petitioner filed an appeal before the Revenue Appellate Authority, which was accepted and the order of the A. C. T. O. (respondent No. 2) was set aside. THE department, however, filed a revision which was accepted by the Board of Revenue for Rajasthan vide its order dated 29th November, 1982. THE appellate order of the Deputy Commissioner (Appeals) (Revenue Appellate authority) was set aside and the order given by respondent No. 2 was maintained. Aggrieved against this order, the petitioner presented and application for reference to this Court and the Board of Revenue referred the following question to this Court for its opinion : " Whether under the facts and circumstances of the case, fresh fruit juice was within the entry No. 2 (a) of the Schedule to the Act, i. e. , fresh fruits. "

(3.) MR. K. C. Bhandari, learned counsel for the respondents, has submitted that according to section 11b of the Act, the levy of interest on the arrears is automatic and the A. C. T. O. had no authority to exempt the dealer from the payment of interest. MR. Bhandari has further submitted that when the liability to pay interest is created by the statute no discretion vests in the assessing authority to grant that relief. In this respect, he placed reliance on a Full Bench decision of the Allahabad High Court in H. Ramzan Ali v. State of U. P. [1975] 36 STC 570 (FB); 1975 Tax LR 1674 (FB), wherein it has been observed as under : " The liability to pay interest is created by the statute and the Sales Tax Officer has no discretion to grant any exemption from the payment of interest. The period during which an order of stay remains in operation is not liable to be excluded for purposes of computing penal interest under section 8 (1-A) of the Act, because the interest runs automatically and does not stop running by virtue of any stay order. " MR. K. C. Bhandari, learned counsel for the respondents, has submitted that the provisions of section 8 (1-A) of the U. P. Sales Tax Act, 1948, are almost similar to the provisions of section 11b of the Rajasthan Sales Tax Act, and a Division Bench of this Court in Natwarlal v. State of Rajasthan (D. B. Civil Writ petition No. 146 of 1979 decided on 11th May, 1979) has held that the provisions of section 11b read with section 11aa of the Rajasthan Sales Tax Act are analogous to those contained in section 8 (1-A) of the U. P. Act and, therefore, the principles laid down by the Supreme Court in Haji Lal Mohd. Biri Works' case [1973] 32 STC 496 (SC) that the liability to pay interest was automatic and arose by operation of law and it was not necessary for the assessing authority to specify the amount of interest in the recovery certificate as it was not possible to specify a definite figure in respect of interest in the recovery certificate till the arrears of sales tax were paid, shall be equally applicable certificate till the arrears of sales tax were paid, shall be equally applicable to the payment of interest under the Rajasthan Sales Tax Act. MR. K. C. Bhandari, learned counsel for the respondent, has, therefore, submitted that so far as the interest is concerned, respondent No. 2 had full authority to issue such notices. He was perfectly within his jurisdiction to issue the notices. MR. Bhandari has, however, conceded that he cannot support the respondents so far as the levy of penalty is concerned because the levy of penalty is a discretionary matter and when the A. C. T. O. has exercised his jurisdiction in a particular manner, no mistake apparent on the face of the record appears to be existed in the case and, therefore, MR. Bhandari did not press his point so far as the levy of penalty is concerned. As regards the interest, he has contended that the levy of interest is statutory and authomatic and, therefore, the A. C. T. O. had no discretion to grant any relief. Section 17 (1) of the Act provides that the assessing authority may rectify its order when it finds that a mistake apparent on the face of the record exists. In this respect, reliance was placed was placed on a decision of the Mysore High Court in M. V. Govindaraju Chetty v. Commercial Tax Officer, Hassan Circle, Hassan [1968] 22 STC 46. Now, it have to see whether in this case, the levy of interest is automatic. It may be worthwhile to mention here that section 11b as it exists today has been substituted by Act No. 4 of 1979 and it has become effective from 7th April, 1979. It is prospective in its operation and, therefore, section 11b as it exists today cannot guide the assessment orders made for the assessment years 1972-73 to 1976-77. These assessments will be governed by section 11b as it existed at the relevant time and which was inserted by Act No. 11 of 1969 with effect from 2nd May, 1969. Section 11b as it existed at the relevant time reads as under : " 11b. Interest on failure to pay tax, fee or penalty.- (a) If the amount of any tax payable under sub-sections (2) and (2a) of section 7 is not paid within the period allowed, or (b) If the amount specified in any notice of demand, whether for tax, fee or penalty, is not paid within the period specified in such notice, or in the absence of such specifications, within 30 days from the date of service of such notice, the dealer shall be liable to pay simple interest on such amount at one per cent per month from the day commencing after the end of the said period for a period of three months and at one and a half per cent per month thereafter during the time he continues to make default in the payments : Provided that, where as a result of any order under this Act, amount on which interest was payable under this section, has been reduced, the interest shall be reduced accordingly and the excess interest paid if any, shall be refunded : Provided further that no interest shall be payable under this section on such amount and for such period in respect of which interest is paid under the provisions of sections 11 and 14. "