Law: Sales Tax Act, 1990

Section: 11,11(2),11(4A),33,34,73

Law: Sales Tax Special Procedure (Withholding) Rules, 2007

Section: 3(7),6,7(4),22,23,26(1)

INTERPRETATION OF STATUTES In absence of clear intention of the legislature to apply a provision of Statute with retrospective effect, it would always be deemed that it would be applicable prospectively. Retrospectivity even in a procedural law is to be avoided if it effects an existing right or otherwise causes inconvenience or injustice to anyone. Acts of inadvertence on the part of an assessee due to any procedural mistake would not create demand of sales tax. SALES TAX ACT, 1990 (VII OF 1990) Section 11 Provisions of section 11(2) only cater 'non-payment' and 'short-payment' of the tax due on supplies made by a person and not cover, whether impliedly or expressedly, failure to withhold sales tax as is evident from the wording used in this section.-There is no doubt in our mind that the learned Inland Revenue Audit Officer has wrongly assumed jurisdiction under section 11(2) of the Act upon a case of failure to withhold sales tax as its provisions only cater 'non-payment' and 'short-payment' of the tax due on supplies made by a person and not cover, whether impliedly or expressedly, failure to withhold sales tax as is evident from the wording used in this section that non-payment or short- payment is with reference to non-payment or short-payment on supplies made by a registered person hence, assumption of jurisdiction by the learned Inland Revenue Audit Officer was an act contrary to law, as such, all the subsequent proceedings of the authorities below based thereupon are also illegal and without jurisdiction. By virtue of Finance Act, 2016, section 11(4A) was inserted to the Sales Tax Act, 1990 empowering the revenue authorities to issue show cause notice for recovery of withholding sales tax from a registered person who failed to withhold the tax or withholds the same but failed to deposit the same.-Learned counsel for the appellant has invited our attention towards section 11(4A) of the Act which by virtue of Finance Act, 2016, applicable w.e.f 1st July, 2016, was inserted to the Sales Tax Act, 1990 empowering the revenue authorities to issue show cause notice for recovery of withholding sales tax from a registered person who failed to withhold the tax…

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