While hearing the case between Tvl.Hotel Peacock vs. The Commercial Tax Officer, Madras High Court proclaimed in its recent order that penal interest can’t be levied under Tamil Nadu Tax on Luxuries Act 1981 since there is lack of provision.
The sole issue in the present case is whether the revenue was justified in levying and demanding interest under the provisions of the Tamil Nadu Tax on Luxuries Act, 1981, when there is no such provision provided under the Act, especially, Section 9 of the Act.
In the present case the assessee company filed its return of income for the relevant assessment year. During the assessment proceedings the assessing authority invoked Section9 of the Tamil Nadu Tax on Luxuries Act, 1981 to levy penal interest.
The council for the Assessee advocate Mr.K.Mani approached the court by challenging the applicability of section 9 of the Tamil Nadu Tax on Luxuries Act, 1981 and also raised the legal issue that whether levy of interest on belated payment of additional tax is proper or not, when there was no provision, enabling applicability of the aforesaid section.
After considering the facts and circumstances, Justice T.S.Sivagnanam noted the decision in S.Gurunathan Vs. Deputy Commercial Tax Officer, Thirupathur, and another, wherein it was held that the interest cannot be demanded for belated payment on Additional Sales Tax, as there is no substantial provision in the TNAST Act itself and similarly, no penalty can be levied, as there is no charging Section under the TNAST Act to levy penalty for the relevant Assessment year.
Relying on the decision, the Court said that “when there is a total lack of jurisdiction to levy penal interest, the petitioner need not be prevented to approach the authorities and file their objections to the impugned notices. That apart, the impugned notices are not show cause notices, but demands for payment of interest, that too, without issuing a show cause notice to the petitioner”.
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