The Court dismissed United Spirits' petition challenging the 18% interest levy under the Goa VAT Act, citing statutory compliance and timely payment obligations.
In a significant ruling, the Bombay High Court (Goa Bench) upheld the imposition of an 18% interest levy on United Spirits Ltd. for the delayed payment of Value Added Tax (VAT) during the financial year 2019-20. The court dismissed the petition filed by United Spirits, which argued that the interest levy was unconstitutional and arbitrary under the Goa Value Added Tax Act, 2005.
The bench, comprising Justices Bharati Dangre and Ashish S. Chavan, affirmed the Additional Commissioner of State Tax-II's decision to impose interest on the delayed VAT payment, rejecting United Spirits' claims of uncertainty due to the introduction of the Goods and Services Tax (GST) regime. The company contended that the ambiguity over whether Rectified Spirit and High Bouquet Spirit were subject to VAT or GST led to the delay in payment.
The judgment highlighted that Rectified Spirit and High Bouquet Spirit were omitted from the VAT Schedule in 2017 but remained liable to VAT at 12.5% under Section 5(1)(e) of the GVAT Act, as they were not covered under GST. The court noted that United Spirits collected VAT but failed to remit the payment timely, thereby justifying the interest levy.
The court emphasized that the statutory scheme under the Goa VAT Act necessitates timely tax payments and that the lack of clarity regarding tax liability does not absolve the dealer from interest obligations. The judgment further noted that the petitioner was aware of its VAT liabilities, as evidenced by earlier compliance and the filing of returns, albeit declaring zero liability.
The decision holds significance as it clarifies the applicability of VAT in the transitional GST regime and underscores the obligation of businesses to comply with tax statutes despite regulatory uncertainties.
Bottom Line:
Goa Value Added Tax Act, 2005 - Dealer liable to pay interest at 18% under Section 25(4) for delayed payment of VAT - Filing of returns without timely payment of VAT due makes the dealer subject to interest liability.
Statutory provision(s):
- Goa Value Added Tax Act, 2005 - Sections 5(1)(e), 24, 25(4)
- Rule 24 of the Goa Value Added Tax Rules
The ruling serves as a precedent for other cases involving tax ambiguities in the post-GST implementation era, reinforcing the principle of statutory compliance and timely tax payments.
