STATE OF HARYANA v. M/S NUCHEM LTD., FARIDABAD

CORAM: HON'BLE MR. JUSTICE ASHUTOSH MOHUNTA. HON'BLE MR. JUSTICE MEHINDER SINGH SULLAR. PRESENT: MR. GAGANDEEP SINGH WASU, DAG, HARYANA. NONE FOR THE RESPONDENT. ASHUTOSH MOHUNTA, J.(ORAL) The Haryana Tax Tribunal, Chandigarh vide order dated

12.4.2006, has referred the following question of law for adjudication by this Court:- “(1) Whether in the facts and circumstances of the case, the amended provisions of Section 9 of operative retrospectively when read with sub section (1) of Section 120 of the Finance Act, 2000? (2) Whether the decision of Hon'ble Apex Court in the case of Sales Tax Officer Ward – II, Muradabad and others versus Oriental Coal Corporation reported as 68-STC- 398 (SC) has been correctly applied by the Tribunal in the fact and circumstances of the present case? (3) Whether interest can be levied on delayed payment mad GSTR No.26 of 2006 -2- pertaining to any period before 12th May, 2000 i.e. the date on which the Finance Bill, 2000 received the ascent of the President? Counsel for the State submits that as far as question No.1 is concerned, the same is squarely covered by the decision of the Supreme Court in Civil Appeal No.2352 of 2007 M/s Indodan Industries Ltd. vs.

State of U.P. & Ors., decided on 20.10.2009, wherein it has been held that Section 120 of the Finance Act, 2000 makes sub-Section (2B) effective right from the very first date of commencement of 1956 Act, i.e. 5.1.1957. Learned counsel further submits that in view of the aforementioned decision the assessee is liable to pay interest on the delayed payment of 'tax due'. After hearing the counsel for the appellant, we are of the considered opinion that the present case is squarely covered by the decision in M/s Indodan Industries Ltd. (supra). It has been held by the Hon'ble Apex Court as under:- “One more aspect needs to be highlighted. In the present case, we are concerned with the levy of interest for delayed payment. Under sub-Section (2B) to Section 9, such interest for delayed payment is given the status of "tax due". The said interest is compensatory in nature in the sense that when the assessee pays tax after it becomes due, the presumption is that the Department has lost the revenue during the interregnum period (the date when the tax became due and the date on which the tax is paid).

The assessee enjoys that amount during the said period. It is in this sense that the interest is compensatory in nature and in order to recover the lost GSTR No.26 of 2006 -3- revenue, the levy of interest is contemplated by Section 120 of the Finance Act, 2000 retrospectively.” In view of the above it is held that interest can be levied on the delayed payment retrospectively. Accordingly, questions No.1 and 3 are decided in favour of the Revenue and against the assessee. In view of our findings to questions No.1 and 3, question No.2 does not survive for adjudication. The reference is answered accordingly. (ASHUTOSH MOHUNTA) JUDGE May 17, 2010 Gulati (MEHINDER SINGH SULLAR) JUDGE