D. PARRY (INDIA) LTD.versusASSISTANT COMMISSIONER OF COMMERCIAL TAXES, CHENNAI

A                          E.l.D. PARRY (INDIA) LTD.
                                          v.
     ASSISTANT COMMISSIONER OF COMMERCIAL TAXES, CHENNAI

                                   MAY 3, 2005

B     [S.N. VARIAVA, DR. AR. LAKSHMANAN AND S.H. KAPADIA, JJ.]


          Sugarcane (Control) Order, 1966-Clause 5-A; Tamil Nadu ·General
                                                                                     -
    Sales Tax Act, 1959-Sections 13(2), 24(3)-lnterest on non-payment oftax-
    Sugar producers purchasing sugarcane required to pay a minimum price and
C   additional price under Clause 5-A which is determinable only at the end of
    sugar year-Assessee filing monthly return and paying tax on minimum price-
    After determination of Clause 5-A price, assessee filing revised return and
    paying tax-Assessing Officer demanding interest on the Clause 5-A price
    from the date of purchase of sugarcane till payment of tax-Sustainability
D    of-Held: Clause 5-A price is determinable only at the end ofsugar year, thus
    could not be included in the monthly return-Therefore, monthly return not
    showing clause 5-A price would neither be incorrect nor incomplete-Interest
    becomes payable only when the tax demanded, is not paid-Since assessee
    paid tax even before the final assessment took place, the claim of interest u/
E   s.24(3) is not sustainable.

          By virtue of Clause 3 of Sugarcane (Control) Order, 1966 the sugar
    producers were required to pay the minimum price of sugar immediately
    on purchase of sugarcane. In addition, by virtue of Clause 5-A, an
    additional price was also payable. The determination of additional price
F   was dependent on the amount (in rupees) of sugar produced during sugar
    year, which could only be determined at the end of the sugar year and
    not earlier. In view of this, State Government.advised the sugar producers
    to pay a price, which was higher than the minimum price.

          'Appellants are the sugar producers. In their monthly return, they
G   showed their turnover on the basis of minimum price paid by them and
    paid tax thereon. They indicated the additional price, which they had paid
    as per the advice of the Government but did not include it as part of
    turnover and did not pay tax on such additional price. When the price
    under Clause 5-A was fixed the appellants filed a revised return and paid
    tax on that. Thereafter, assessment order was passed, demanding interest
H                                      1144
         E.l.D. PARRY (INDIA) LTD. v. ASSIST. COMMR OF COMMER. TAXES   1145

under Section 24(3) of Tamil Nadu General Sales Tax Act, 1959 on the            A
price fixed under Clause 5-A from the date the sugarcane was purchased
till the date payment of tax by the appellant. The demand was challenged
before the Tribunal which dismissed the same. Writ Petition filed before
the High Court was also dismissed.

       In appeal to this Court, the appellants contended that the price fixed   B
under Clause 5-A would only be known after it was determined and th~t
till the Clause 5-A price was announced it would not be includible in th~
returns; that the advances given as per the advice of the Government are
mere ad-hoc payments and that these advances do not constitute price and
thus not includible in the monthly turnover of the Appellants; and on a         C
plain reading of Sections 13 and 24 of the Act, no interest can be levied
unless and until an assessment has taken place and a notice of demand
has been issued and tax had not been paid within the time specified in the
notice of demand.

     Allowing the appeals, the Court
                                                                                D
       HELD : 1. If the amounts are paid towards the Clause 5-A price,
they would be payment towards price and therefore part of turnover even
though they may be paid in advance. The Clause 5-A price can only be
decided on the basis of a formula prescribed. It cannot be deCided at least
till the end of the s.ugar year. In practice it is however decided much later. E
As the price would be unknown, neither the assessee nor the Assessing·
Officer could predict what the price would be. Therefore till the price
under Clause 5-A is fixed there would be no question of an assessee ·
including it in the monthly returns filed by him. A monthly return filed ,
not showing the price fixed under Clause 5-A would therefore, neither be
incorrect nor incomplete. It is only after the price under Clause 5-A is , F
fixed that the assessee would be required to file a revised return showing '
the price fixed under Clause 5-A as part of his turnover.
                                                       11151-D-H; 1152-A, Bl I

     State ofTamil Nadu v. Kothari Sugars & Chemicals ltd, 1199617 SCC
751, distinguished                                                     ,0
     U.P. Cooperative Cane Unions Federations v. West U.P. Sugar Mills
Association, 12004) S SCC 430, referred to

     2.1. Under Section 13(2) the monthly return has to indicate the actual
turnover and tax is then payable as per the return. If the return shows         H
    1146                   SUPREME COURT REPORTS                 [2005] 3 S.C.. R.    ,,
A the actual turnover and tax is not paid as per the return, then interest
    would be payable under Section 24(3) as that would be a case where
    amount has remained unpaid after the date specified for its payment.
    However, if the monthly return does not indicate the actual turnover then
    it was for the Assessing Authority to make a demand on the footing that
    the return was incomplete or incorrect. In the absence of any such demand
B

                                                                                     --
    interest would not become payable under Section 24(3) as there is no
    provision for charging of interest prior to the date of demand.
                                                                    (1156-D-FJ

          2.2. It is an admitted position that tax as per the monthly return had
c   been paid within time and that there was no assessment, even provisional,
    by the Assessing Authority prior to the final assessment made after the
    revised returns had been fiied. As soon as the revised return was filed,
    the Appellants paid the tax as per the revised return. Therefore they paid
    the tax even before the final ·assessment took place. Thus the claim for
                                                                                     ~



    interest, under Section 24(3) from the date that the advances were paid
D   to the sugarcane growers is not sustainable.

         J.K. Synthetics Ltd v. Commercial Taxes Officer, (1994) 4 SCC 276 and
    Frick India Ltd v. State of Haryana, (1994) 5 SCC 559, followed.

           Associated Cement Company Ltd. v. Commercial Tax Officer, Kota,
E (19811 4 sec 578, referred to.
        3. When the levy of interest emanates as a statutory consequence and
  such liability is a direct consequence of non-payment of tax, be it under
  Section 215 of the Income Tax Act or under Section 7(2) I 7(2A) read with
  Section 11 B(a) of the Rajasthan Sales Tax Act, 1954 or under Section 13(2)
F I 24(3) read with Rule 18(3) under the Tamil Nadu General Sales Tax Act,
  1959, then such a levy is different from the levy of interest which is
  dependent on the discretion of the Assessing Officer. The default arising
  on non-payment of tax on an admitted liability in the case of self-
  assessment falls under Section 24(3) read with Rule 18(3) which attracts
G automatic   levy of interest whereas the default in filing incomplete and
  incorrect return falls under Rule 18(4) which attracts best judgment
  assessment in which the levy of interest is based on the adjudication by
                                                                                     --".-
  the Assessing Officer. Therefore, Rule 18(3) and Rule 18(4) operate in
  different spheres. 11156-G-H; 1157-A, Bl

H          CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 6448-6455
EJ.D. PARRY (INDIA) LTD. v. ASSIST. COMMR. OF COMMER TAXES [VARIAVA, J.] 1147


of 2002.                                                                           A
     From the Judgment and Order dated 8.10.200 I of the Madras High
Court in W.P. Nos. 1971, 15437/99, 9212 and 12978-12982 of 2000.
                                    WITH
      C.A. No. 4230 of 2003.                                                       B
     Joseph Vellapally, C.N.Sree Kumar, Ms. M.L. Shyjatha, P.H. Parekh,
E.R. Kumar, Ms. Ranjeeta Rohatgi with him for the Appellant.

     T.L.V. Iyer, and S. Balakrishnan, Subramonium Prasad, K.K. Misra,
Sree Narain Jha, R.Gopala Krishnan and Abhay Kumar with them for the               C
Respondent.

      The Judgment of the Court was delivered by

    S.N. VARIA VA, J. These Appeals are against the Judgment of the
Madras High Court dated 8th October, 2001.                                         D
      Briefly stated the facts are as follows:

      The Appellants are the manufacturer of sugar. They purchase sugarcane
from fanners. By virtue of the Sugarcane (Control) Order, 1966 made under
the Essential Commodities Act, 1955 the price for such purchase is statutorily     E
fixed. Clause 3 of the Sugarcane (Control) Order lays down the minimum
price of sugarcane payable by a producer of sugar. This is the price which
is payable immediately at the time that the sugarcane is purchased. Over and
above this, by virtue of Clause 5-A, an additional price is also payable. This
additional price is to be fixed on the basis of a formula laid down in the first
Schedule of the Sugarcane (Control) Order. The Formula given therein is as         F
follows:

        R-L+2A+B
       X=------
                2C
                                                                                   G,
R is the amount in rupees of sugar produced during the sugar year excluding
the excise duty paid or payable to the factory by the purchaser. It is evident
from the formula itself that the additional price is the amount which is
incapable of determination at the time the sugarcane is supplied to the factory
by the grower. The additional price can only be determined at the end of the
sugar year and not earlier. Even though the additional price could not be          H
    1148                    SUPREME COURT REPORTS                   [2005] 3 S.C.R.

A   determined till the end of the sugar year, in practice it took a long time to
    determine this price. Therefore the State Government advis~d .!he sugar
    producers to pay a price which was higher than the minimum price fixed
    under Clause 3. The manufacturers of sugar, like the Appellants, also paid
    the additional price as fixed by the Government at the time of purchase. The
B   additional price so paid was then adjusted against the price fixed under Clause
    5-A of the Sugarcane (Control) Order, 1966.

         Under the Tamil Nadu General Sales Tax Act, 1959 dealers were given
    an option, under Section 13(2), of paying tax in advance on the basis of
    monthly returns. Section 13 is relevant and it reads as follows :
c           "13. ·Advance payment of tax

                (I) The tax for each year payable under any of the provisions of
            this Act may be collected in advance during the year in monthly or
            other prescribed instalments and fo.r this purpose a dealer may be
            required to furnish within the prescribed period such returns as may
D           be prescribed. The assessing authority may provisionally determine
            the amount of tax payable in advance during any year or in respect
            of any period and on such determination and intimation to the dealer
            he shall pay such tax in such instalments and within such period as
            may be prescribed.
E                 (2) In lieu of the tax provisionally determined under sub-section
             (I), a dealer may, at his option, pay tax in advance during the year
             on the basis of his actual turnover for each month or for such other
             periods as may be prescribed. For this purpose, he may be required
           . to furnish returns showing his actual turnover for each month or other
F            periods as may be prescribed and to pay tax on the basis of such
             returns. The tax under this sub-section shall become due without any
             notice of demand to the dealer on the date of receipt of the return or
             on the last due date as prescribed, whichever is later.

                 2A. Notwithstanding anything contained in sub-sections (I) or
G           (2), every dealer other than those paying tax under sub-section (2) of
            section 30, section 3E or 7E, whose total turnover in the preceding
            year was not less than ten lakhs of rupees or his taxable turnover was
            not less than three lakhs of rupees and all dealer newly registered in
            the year shall pay tax during the year on the basis of his actual
            turnover for each month or for such other period, as may be prescribed.
H
            E.1.D. PARRY (INDIA) LTD. v. ASSIST. COMMR. OF COMMER. TAXES [VARIAVA, J.) ] 149

                       (3) If no return is submitted by the dealer under sub-section (I)       A
                   or sub-section (2) within the prescribed period, or if the return
                   submitted by him appears to the assessing authority to be incomplete
                   or incorrect, the assessing authority may, after making such enquiry
                   as it considers necessary, determine the tax payable by the dealer to
                   the best of its judgment:
                                                                                               B
                       PROVIDED that, before taking action under this sub-section on
                   the ground that the return submitted by the dealer is incomplete or
                   incorrect, the dealer shall be given a reasonable opportunity of proving
                   the correctness or completeness of the return submitted by him.

'~
                       (4) If the assessing authority has reason to believe that the tax       c
                   determined by it for any period was based on too low a turnover or
                   was made at too low a rate or was based on too high a turnover or
',,..
                   was made at too high a rate, it may enhance or reduce as the case
                   may be, such determination tax:

                       PROVIDED that before making an enhancement of the tax payable           D
                   as aforesaid, the assessing authority shall, except where such
                   enhancement is based on the turnover finally determined for the
                   preceding year, give a reasonable opportunity to the dealer to show
                   cause against such enhancement and ma.lee such enquiry as it may
 ,--
                   consider necessary.
                                                                                               E
                        (5) The determination and collection of tax under this section
                    shall be subject to such adjustment as may be prescribed on the
                    completion of final assessment in the manner prescribed."
-r-
            The Appellants were thus filing returns. In these monthly returns they showed
            their turnover on the basis of minimum price paid by them and paid tax             F
            thereon, They indicated the additional price which they had paid as per the
            advice of the Government but did not include it as part of the turnover and
            did not pay tax on such additional price. As and when the price, under Clause
            5-A, was fixed the Appellants filed a revised return and paid tax on that.
                                                                                               G
                  After the revised returns were filed an Assessment Order was passed.
~           In the Assessment Order interest was sought to be charged, under Section
      ""-
            24(3), on the price fixed under Clause 5-A from the date that the sugarcane
~/          was purchased till payment of tax was made by the Appellants. The Appellants
            challenged the demand for interest before the Tamil Nadu Taxation Special
. I
            Tribunal. The Tribunal dismissed the Petition on 19th April, 2000. The             H
    1150                    SUPREME COURT REPORTS                   [2005) 3 S.C.R.

A Appellants then filed Writ Petition before the High Court which has been
    dismissed by the impugned Judgment.

          Two questions arise for our consideration: {a) whether the advance
    paid, pursuant to the advice of the Government, can be considered to be price
    and thus includible in the monthly turnover of the Appellants and (b) whether
B   interest under Section 24(3) can be charged on the price fixed under Clause
    5-A and/or on the advance paid and if so, from what date.

           On these questions, Mr. Vellapally has submitted that the price fixed
    under Clause 5-A would only be known after it was determined and that till
C   the Clause 5-A price was announced it would not be includib1e in the returns
    for the reason that the price would not be known. He submitted that the
    advances given as per the advice of the Government are mere ad-hoc payments
    and that these advances do not constitute price. In support of his submission,
    he relied upon the Judgment of this Court in the case of State of Tamil Nadu
    v. Kothari Sugars & Chemicals ltd, reported in [1996] 7 SCC 751. He
D   further submitted that, in any case, on a plain reading of Sections 13 and 24
    of the Tamil Nadu General Sales Tax Act no interest can be levied unless and
    until an assessment has taken place and a notice of demand has been issued
    and tax had not been paid within the time specified in the notice of demand.
    In support of this submission, he relied upon the cases of J.K. Synthetics Ltd
    v. Commercial Taxes Officer, reported in [1994] 4 SCC 276 and Frick India
E   ltd. v. State of Haryana, reported in [1994] 5 sec 559.

           On the other hand, Mr. Iyer submitted that the Appellants had chosen
    to follow the procedure under Section 13(2). He submitted that tax had to be
    paid on the actual turnover. He submitted that the decision of this Court in
F   Kothari Sugars and Chemicals ltd 's case (supra) was only concerned with
    the question as to whether the a1nounts paid in advance, over and above the
    price fixed under Clause 5-A, can be considered to be price. He submitted
    that the observations made in that case are in the context of this question. He
    points out that this Court has in the case of U.P. Cooperative Cane Unions
    Federations v. West U.P. Sugar Mills Association, reported in [2004] 5 SCC
G   430 so noted. He submitted that therefore the observ:itions in Kothari Sugars
    and Chemicals ltd. 's case cannot be construed to mean that the advance
    price, paid towards the price fixed under Clause 5-A, does not constitute
    price. He further submitted that J.K. Synthetics ltd 's case would have no
    application as, in the present case, the tax is to be paid on actual turnover
H   which would mean the actual amounts paid by way of price.
  E.l.D. PARRY (INDIA) LTD. v. ASSIST. COMMR. OF COMMER. TAXES [VARIAVA, J.] 1151

       We have heard the parties and considered the submissions.                    A
         Let us first consider whether the advance paid, towards the Clause 5-
  A price, constitutes price and is includible in the monthly returns as turnover.
  As stated above, reliance has been placed, by Mr. Vellapally, on the Judgment
  of this Court in Kothari Sugars and Chemicals Ltd 's case (supra). This
  Judgment does indicate that the advance paid pursuant to the advice of the .B
  Government cannot be considered to be the price. But we find that the
  observations made in this Judgment are in the context of the question whether
  additional amounts paid over and above the price fixed under Clause 5-A can
  be considered to be the price. This has been so noticed by a Constitution
  Bench of this Court in UP. Cooperative Cane Unions Federations's case C
  (supra). In Kothari Sugars & Chemicals Ltd 's case, tax had admittedly been
  paid in time on the advance paid towards Clause 5-A price. Tax was also
  sought to be levied on monies advanced over and above the Clause 5-A
  price. The observations made are merely setting out that advances made, over
  and above the Clause 5-A price, cannot be considered to be price. However
  it is clear that if amounts are paid towards the Clause 5-A price, they would D
  be payment towards price and therefore part of turnover even though they
  may be paid in advance. In our view, Kothari Sugar & Chemicals Ltd.'s case
· does not Jay down to the contrary. It does not even deal with this aspect. Of
  course Clause 5-A price will not be known till much later. However the
  Government advice makes it clear that the advance payment is to be towards . E
  the Clause 5-A price. Thus so long as the advance made is less than .or equal
  to the Clause 5-A price it is advan~e payment of price. However if anything
  more has been paid then that would not be price in the absence ofa contract
  or any statutory provision. It will thus have to be held that in the monthly
  returns the advance should have been included as part of turnover. If tax has
  been paid on advance and it is found that excess payment has been made, F
  refund of tax on the excess payment can be claimed.

        The question then arises whether interest, under Section 24(3) can be
 charged on the Clause 5-A price or on the advance and if so from what date.
 As has been noted hereinabove, the price fixed under Clause 5-A can only
 be decided on the basis of a formula. set out hereinabove.
                                                       .     It therefore cannot    G
 be decided at least till the end of the sugar year. In pnctice it is however
 decided much later. As the price would be an unknown, neither the assessee
 could predict what the price would be nor could the Assessing Officer, even
 on the basis of his best judgment, predict what that price would be. Therefore
 till the price under Clause 5-A is fixed there would be no question of an          H
    I I 52                    SUPREME COURT REPORTS                 [2005] 3 S.C.R.

A   assessee including it in the monthly returns filed by him. A monthly return
    filed not showing the price fixed under Clause 5-A would neither be incorrect
    nor incomplete. It is only after the price under Clause 5-A is fixed that the
    assessee would be required to file a revised return showing the price fixed
    under Clause 5-A as part of his turnover.~Mr. Iyer fairly admitted that interest
B   on the price fixed under Clause 5-A could not be levied from the date the
    sugarcane was purchased as it would be impossible to know in advance what
    the price under Clause 5-A would be. His submission however was that the
    advance paid was towards the price fixed under Clause 5-A and therefore the
    amount paid as advance should have been includecl in the monthly returns as
    turnover and tax paid on that. He submitted that such ret'!rns had to show the
C   actual turnover and if the returns did not show the actual turnover then the
    returns were incorrect and/or incomplete and therefore interest would be
    leviable from the date that these amounts were actually paid to the sugarcane
    growers till the tax on these amounts was paid.

          Thus the Assessment Order levying interest on the entire price fixed
D   under Clause 5-A and the Judgments of the Tribunal and the High Court
    upholding that are dearly erroneous. As stated above, the price fixed under
    Clause 5-A would not be known till much later. Thus, it would be impossible
    to sho~ it in the monthly returns filed earlier. Of course as indicated earlier,
    Mr. Iyer is rig~t the monthly returns should have included the amounts paid
E   as advance in the turnover. The question still remains whether by not including
    them interest becomes payable on them under Section 24(3).

          To cons~der this aspect, one needs to look at Section 13, which has
    been set out hereinabove. It is to be seen that under Section 13(2) tax could
    be paid in advance on the basis of monthly returns. A plain reading of
F   Section 13(2) shows that ·'te tax which has to be paid on the basis of such
    returns. If, as now contended by Mr. Iyer, the returns are incomplete or
    incorrect t:1en, under Section 13(3), the Assessing Authority must, after giving
    a reasonable opportunity to the assessee, determine what was the tax payable
    and issue a notice to pay the tax within a parti~ular period. The determination
    and collection under Section 13 would then be subject to such adjustments
G   as may be prescribed on completion of the final assessment.

             Section 24 reads as follows :                                                 •
                                                                                       -"'41

              · "24. Payment and recovery of tax
                                                                                       c

H                 (I) Save as otherwise provided for in sub-section (2) of section
E.l.D. PARRY (INDIA) LTD. v. ASSIST. COMMR. OF COMMER. TAXES (VARIAVA, J.] 1153

       ·13, the tax assessed or has become payable under this Act from a A
        dealer or person and any other amount due from him under this Act
        shall be paid in such manner and in such instalments, if any ancl
        within such time as may be specified in the notice of assessment, not
        being less than twenty-one days from the date of service of the notice.
        The tax under sub-section (2) of section 13 shall be paid without any B
        notice of demand. In default of such payments the whole of the
       amount outstanding on the date of default shall become immediately
       due and shall be a charge on the properties of the person or persons
        liable to pay the tax or interest under this Act.

           (2) Any tax assessed on or has become payable by, or any other C
       amount due under this Act from a dealer or person and any fee due
       from him under this Act, shall, subject to the claim of the Government
       in respect of land revenue and the claim of the Land Development
       Bank in regard to the property mortgaged to it under section 28(2) of
       the Tamil Nadu Co-operative Land Development Banks Act, 1934
       (Tamil Nadu Act X of 1934), have priority over all other claims D
       against the property of the said dealer or person and the same may
       without prejudice to any other mode of collection be recovered-

           (a) as land revenue; or

           (b) on application to any Magistrate by such Magistrate as if it       E
               were a fine imposed by him;

           PROVIDED that no proceedings for such recovery shall be taken
       or continued as long as he has, in regard to the payment of such tax,
       other amount or fee, as the case may be, complied with an order by
       any of the authorities to whom the dealer or person has appealed or        F
       applied for revision, under sections 31, 3IA, 33, 35, 36, 37 or 38.

           (3) On any amount remaining unpaid after the date specified for
      its payment as referred to in sub-section (I) or in the order permitting
      payment in instalments, the dealer or person shall pay, in addition tb
      the amount due, interest at one and half per cent per month of such         G
      amount for the first three months of default and at two per cent per
      month of such amount for the subsequent period of default.

          PROVIDED that if the amount remaining unpaid is less than one
      hundred rupees and the period of default is not more than a month,
      no interest shall be paid:                                                  H
    1154                    SUPREME COURT REPORTS                   [2005] 3 S.C.R.

A                PROVIDED FURTHER that where a dealer or person has preferred
            an appeal or revision against any order of assessment or revision of
            assessment under this Act, the interest payable under this sub-section,
            in respect of the amount in dispute in the appeal or revision, shall be
            postponed till the disposal of the appeal or revision, as the case may
            be, and shall be calculated on the amount that becomes due in
B           accordance with the final order passed on the appeal or revision as if
            such amount had been specified in the order of assessment or revision
            of assessment, as the case may be.

                (3A) Where a dealer submits the prescribed return within ten
            days after the expiry of the prescribed period, he shall also pay, in
c           addition to the amount of tax due as per his return, interest at two per
            cent of the tax payable for every month or part thereof.

                (4) Where the tax paid under this Act is found to be in excess on
            final assessment or revision of assessment, or as a result of an order
            passed in appeal, revision or review, the excess amount shall be
D
            refunded to the dealer after adjustment of arrears of tax, if any, due
            from him. Where t~e excess amount is not refunded to the dealer
            within a period of ninety days from the date of the order of assessment
            or revision of assessment and in the case of order passed in appeal,
            revision or review, within a period of ninety days from the date of
E           receipt of the order, the government shall pay by way of interest,
            where the amount refundable is not less than one hundred rupees, a
            sum equal to the sum calculated at the rate of one percent or part
            thereof of such amount for each month or part thereof after the expiry
            of the said period of ninety days.

F               Explanation: For the purpose of this section, the expression "order
            passed in appeal, revision or review" shall not include an order passed
            in such appeal, revision or review with direction to make fresh
            assessment order."

    Under Section 24(1) if the tax has been assessed. or has become payable
G   under the Act, then the payment has to be made within the said time as may
    be specified in the notice of assessment and tax under Section I 3(2) has to
    be paid without any notice of demand. However, as seen above, the tax under
    Section 13(2), in the absence of any determination by the Assessing Authority.     ,
                                                                                       .._
    is tax as per the· returns. If default is made in payment of such tax then           '
H   interest becomes payable under the Act. In the present case, it is an admitted
E.1.0. PARRY (!NOIA) LTD. v. ASSIST. COMMR. OF COMMER. TAXES [VARIAVA, J.) J J 55

position that tax as per the monthly return had been paid within time. It is        A
also an admitted position that there was no assessment, even provisional, by
the Assessing Authority prior to the final assessment made after the revised
returns had been filed. Interest becomes payable under Section 24(3) on an
amount remaining unpaid after the date specified for its payment under sub-
section (I) of Section 24. As seen above sub-section ( l) of Section 24 deals       B
with an assessed tax or tax which has become payable under the Act. In cases
covered by Section 13(2) tax must be paid without any notice of demand. But
as stated above, under Section 13(2) tax is to be paid "on the basis of such
returns". Tax as per the returns has admittetily been paid. If the returns were
incomplete or incorrect as now claimed the assessing authority had to
detennine the tax payable and issue a notice of demand. In the absence of           C
any assessment, even provisional, and a notice of demand no interest would
be payable under Section 24(3). In this case, it is an admitted position that
as soon as the revised return was filed th~ Appellants paid the tax as per the
revised return. Therefore they paid the tax even before the final assessment
took place. Thus the claim for interest, under Section 24(3) from the date that     D
the advances were paid to the sugarcane growers is not sustainable. There is
no provision under the Act which permits charging of interest unless and
until there has been a provisional assessment and a notice of demand
prescribing the period within which the tax was to be paid.

       Our view finds support from the Constitution Bench decision of this E
Court in J.K. Synthetics Ltd's case (supra). It must be mentioned that earlier
to J.K. Synthetics Ltd 's case the question whether interest would be payable
from the date of return 011 the footing that the return is an incorrect return had
come up for consideration before a three Judge Bench of this Court in the
case of Associated Cement Company Ltd v. Commercial Tax Officer, Kola, F
reported in [ 1981) 4 SCC 578. There was a difference of opinion. The majority ,
Judgment held that the return must be a true return and if in a final assessment ;
it is held that the return was incorrect or incomplete, then interest would be
leviable from the date the incomplete or incorrect return was filed. The minority
opinion held that tax was to be paid as per the return and so long as tax was
paid as per the return, merely because in the final assessment it was held that G
the return was incorrect or incomplete interest could not be levied prior to the
date of final assessment and the demand thereunder. The majority view was
doubted and the question was referred to a Constitution Bench. The
Constitution Bench in J.K. Synthetics ltd 's case accepted the minority view '
and overruled the majority view. The Constitution Bench held that tax was H
payable only as per the returns. It is held that if incomplete or incorrect return
    1156                    SUPREME COURT REPORTS                    [2005] 3 S.C.R.

A are filed it was ope_n to the Assessing Officer to provisionally assess and
    make a demand. It is held that if that was not done then interest could not
    be levied. on the (ooting that in a final assessment it is found that the returns
    had been incorrect.

          The decision in J.K. Synthetics Ltd 's case was thereafter followed by
B   another Constitution Bench in the case of Frick India Ltd 's case (supra).
    These Judgments fully cover the question under consideration. They are not
    only binding on us but we are in full agreement with the principle laid down
    therein.

C           Mr. Iyer made an attempt to distinguish the Judgments on the ground
    that the provisions under consideration, in J. K. Synthetics ltd 's case, are not
     inpari materia with the provisions of the Tamil Nadu General Sales Tax Act.
    He submitted that the words "actual turnover" had not been used in the
     Rajasthan Act. He submitted that under the Tamil Nadu General Sales Tax
    Act the return has to be as per the actual turnover. In our view, the words
D   "actual turnover" can have no different meaning from the word "turnover".
    The word "turnover" has been defined under Section 2(r) to mean the aggregate
    amount for which the goods are bought and sold. Under Section 13(2) the
    monthly return has to indicate the actual turnover and tax is then payable as
    per the return. If the return shows the actual turnover and tax is not paid as
E   per the return, then interest would be payable under Section 24(3) as that
    would be a case where amount has remained unpaid after the date specified
    for its payment. However, if the monthly return does not indicate the actual
    turnover then it was for the Assessing Authority to make a demand on the
    footing ·that the return was incomplete or incorrect: In the absence of any
F   such demand interest would not become payable under Section 24(3) as there
    is no provision for charging of interest prior to the date of demand. In this
    respect the principles laid down in J.K. Synthetics ltd 's case fully apply
    even though the provisions of the Tamil Nadu General Sales Tax Act and the
    Rajasthan Act may not be identical. The principle to be kept in mind is, that,
    when th~ levy of interest emanates as a statutory consequence and such
G   liability is a· direct consequence of non-payment of tax, be it under Section
    215 of the Income Tax Act or under Section 7(2) I 7(2A) read with Section
    1lB(a) of the Rajasthan Sales Tax Act, 1954 (as discussed in the decision of
    this Court in the case of J. K. Synthetics ltd. 's case (supra) or under Sections
    13(2) I 24(3) read with Rule 18(3) under the Tamil Nadu General Sales Tax
H   Act, 1959, then such a levy is different from the levy of interest which is
    depend.ent on the discretion of the Asses~ing Officer. The default arising on
 E.l.D. PARRY (INDIA) LTD. 1•. ASSIST. COMMR. OF COMMER. TAXES [VARIAVA, J.] 1157

non-payment of tax on an admitted liability in the case of self-assessment          A
falls under Section 24(3) read with Rule 18(3) which attracts automatic levy
of interest whereas the default in filing incomplete and incorrect return falls
under Rule 18(4) which attracts best judgment assessment in which the levy
of interest is based on the adjudication by the Assessing Officer. Therefore,
Rule 18(3) and Rule 18(4) operate in different spheres.
                                                                                    B
      In this view of the matter, the impugned Judgment of the High Court
and the Order of the Tribunal as well as the Assessing Authority cannot be
sustained and are hereby set aside to the extent they levy interest under
Section 24(3 ).

      In this view of the matter, the Appeals stand allowed. There will be no       C
order as to costs.                    ·

D.G.                                                          Appeals allowed.