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Sales Tax Review |
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August 2006 |
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Representation And Responses |
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27th July, 2006 |
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Shri B. C.
Khatua,
Hon’be
Commissioner of Sales Tax,
Maharashtra
State,
Respected
Sir, |
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Sub : |
Levy of interest u/s 9(2) of the Profession Tax Act,
1975 (PT Act) |
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Re : |
Levy by Professional Tax
Officers for actual period of delay, internal audit points for short levy
etc. |
Problem faced:
It is noticed that when the payment under the PT Act is
late by three/four days, Officers during the assessments have levied
interest rightly for the period of delay. Subsequently when internal audit
took place from Joint Commissioner’s office, point for short levy of
interest was taken up. Concerned officers were informed about the audit
objection for the short levy. As per the audit team interest has to be
levied for entire month even if delay is of few days.
To take care of these audit point, notices for
rectifications u/s. 15 of the Act were issued. Written submissions made by
dealers/representatives in this regard have been over looked and the
rectification orders are passed. The amount involved being petty, usually
dealers pay it off and the rectification is never challenged before the
appellant authority. Even if it is challenged, unfortunately it will lead to
unwanted litigation and waste of departmental machinery.
I am writing this letter to you with a humble submissions
to kindly go through the actual trouble spot and to suitably instruct the
concerned authorities.
Reason:
I have met the person in charge of the internal audit
from the Joint Commissioner’s office. He has brought to my notice, internal
letter numbered AC/PT-03/Adm.7/22/B-419 dated 20-9-2003. The sum and
substance of the letter is that after amendment the words "the month or
parts thereof" were replaced by the words "the month", hence the action of
officers to levy interest for full month is correct. [Let me make it clear
that amendment referred in the letter was made way back in 1987.]
Submission:
With due respect, I wish to point out to you actual legal
position. The section under consideration is reproduced for easy reference.
"9. Consequences of failure to deduct or to pay tax:—
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Without prejudice to the provisions of sub-section (1),
an employer referred to in that sub-section shall be liable to pay simple
interest at one and a quarter per cent of the amount of the tax
payable for each month, for the period for which the tax remains unpaid."
(Emphasis by underline and italics is supplied by me.)
The section is as above since 20-4-1987, except for the
change in rate of interest from two per cent to the present rate with effect
from 1-7-2004.
If the section is read minutely it will be clear that the
rate of interest prescribed is that for a month. But while calculating
interest at the prescribed rate it is to be levied for the period for which
tax has remained unpaid.
May I draw your kind attention to observations of the
Bombay High Court in the case of M/s. Crescent Chemicals (98 STC 441)? The
case was regarding the provision of penalty as it existed from 1969 to
20-4-1987 under the B.S.T. Act. At para 5, the High Court has observed, "The
rate of penalty is specified as a percentage of the amount of tax for each
month. Reference to month is in contradiction to quarter, half-year or year
etc. It does not and cannot mean that it can be levied only for a complete
month."
The use of words in the amended section also serves the
same purpose, but it never states that the interest has to be levied for
full month when the delay is of few days. If the view expressed in the above
referred letter dated 20-9-2003 is to be correct then the words "for the
period for which the tax remains unpaid" will be superfluous and redundant.
It is an accepted cardinal principle that legislature does not use words in
any provisions without any positive intention.
Taking the things to logical conclusion, one cannot say
that interest rate is 1.25% per quarter or per annum etc. It has been
crystal clear provided in the section to be "for month.". But I reiterate
that calculation of interest is based on two parameters, rate of interest
and period of delay. Thus interest has to be calculated at given rate "for
the period for which the tax remained unpaid".
I have to request your honour to consider unjust hardship
caused to many dealers for the faulty audit point of short levy of interest.
If my submissions are correct and worth consideration, then suitable
instructions and clarifications may please be issued at your earliest. Even
the Professional Tax Officers who are now levying interest in the assessment
for full month just to avoid audit queries may also be informed of the stand
your honour wants to take.
| Thanking you. |
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Yours
faithfully,
Sd/-
[Kiran G.
Garkar] |
| 2 |
7-7-2006 |
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To
The
Commissioner of Sales Tax,
Maharashtra
State, Mumbai. |
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| Dear Sir, |
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Ref : Refund Audits |
We have filed returns on behalf of our clients and many of
them are entitled to refunds as per returns. As per scheme of MVAT Act, 2002,
applications were filed for refunds and in some cases they have been received.
However now the officers are visiting places of dealers for refund audits. In
this respect, we do not find any provision in the MVAT Act, 2002. We, as
practitioners, are also unaware of modalities of such audit.
Therefore we request you to inform us and trade about the
modalities of audit. A circular be issued clarifying certain basic issues as
to purpose of audit, scope, powers of officers, consequences of defaults in
audit etc. This is most essential as the trader is in dark about such visits.
We request to do needful at the earliest and oblige.
| Thanking you |
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Yours
faithfully,
Sd/-
(C. B. Thakar)
Advocate |
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| 3 |
7-7-2006 |
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| To |
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The
Commissioner of Sales Tax,
Maharashtra
State,
Mumbai
Dear Sir, |
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Ref : Use of designations by officers |
The designations of various officers in the department have
been changed under the MVAT Act, 2002. The officer who was Sales Tax Officer (S.T.O.)
under BST Act gets elevated as Assistant Commissioner of Sales Tax etc.
However the difficulty arises in case of orders passed under BST Act, 1959. It
is seen that even on the orders passed under BST Act the officer puts
designation as per VAT Act. For example, the S.T.O. passing order under BST
Act put rubber stamp as Assistant Commissioner of Sales Tax. This creates lot
of difficulties, particularly to determine the appeal jurisdiction. It is
known that if order is passed by Assistant Commissioner of Sales Tax under BST
Act the appeal lies to Deputy Commissioner of Sales Tax and so on.
In above example even if rubber stamp shows Assistant
Commissioner of Sales Tax, for BST Act the order is passed by S.T.C. and
appeal should go to Assistant Commissioner of Sales Tax. However in absence of
clarity the appeal can be got filed with wrong forum. It is utmost necessary
that while passing order under BST Act the officers should put rubber stamp as
per their old designations under BST Act, 1959. This will avoid confusion.
We hope your goodself will appreciate the above point and
give necessary instructions at the earliest.
| Thanking you |
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Yours
faithfully,
Sd/-
(C. B. Thakar)
Advocate |
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