Holding

No interest can be levied on tax arrears for purchases of sugarcane made after the amendment because the Act contains no substantive provision authorising such interest.

Summary

The case involved V.V.S. Sugars challenging the levy of interest on tax arrears under Rule 45(4) after the amendment of Section 21(3D) of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961. The Andhra Pradesh High Court had held that the amendment applied only to the 1975‑76 crushing season and permitted interest. The Supreme Court examined the plain wording of the amendment and found that sub‑sections (4) and (5) of Section 21 are excluded for purchases of sugarcane made on or after 29‑12‑1975, and that the amendment is open‑ended with no temporal limitation. Because the Act contains no substantive provision authorising interest on such arrears, interest could not be levied. The appeal was allowed, the lower‑court orders were set aside, and the respondents were directed to refund the amounts with 18% interest per annum.

Issues considered

Whether interest can be levied on arrears of tax under Rule 45(4) after the amendment of Section 21(3D) of the Andhra Pradesh Sugarcane Act.
Whether sub‑sections (4) and (5) of Section 21 are excluded for purchases made on or after the commencement of the amendment.
Whether the amendment of Section 21(3D) is limited to the 1975‑76 crushing season.

Subjects

taxinterest on tax arrearsstatutory interpretationamendmentsugarcaneAndhra Pradeshtaxing statuteRule 45Section 21

Judgment

-- MIS. V.V.S.
.. SUGARS ETC. ETC.
v.
GOVT. OF ANDHRA PRADESH AND ORS.
A

APRIL 28, 1999

[S.P, BHARUCHA, B.N. KIRPAL, S. RAJENDRA BABU, B
S.S. MOHAMME°: QUADRI. AND M.B. SHAH, JJ.]

A.P. Sugarcane (Regulation of Supply and Purchase) Act, 1961/A.P.
Sugarcane (Regulation of Supply and Purchase) Rules, 1961 : Section 21 (JD)
(a), (4) & (5)/Rule 45(4)-Provisionfor levy of Purchase tax on sugarcane- C
Provision for payment of interest on delayed payment of tax-Section 21
amended w.e.f 29-12-1975, exempting tax on purchase of sugarca~e
Challenged in a writ petition-High Court took the view that amendment to
Section 21 was restricted to the crushing season 1975-76-Held no interest
could be levied under Rule 45 of the said Rules-On appeal, Held : Taxing D
statute must be interpreted as it reads without additions and subtractions-
Section 21(3D) came into force on the date of the commencement of the
Amending Act-Its provisions are open ended and are intended to apply
upon commencement of the Amending Act with no limitation in time-No
substantive provision in the Act for levy of interest on arrears of lax applying
to purchase of sugarcane made subsequent to the Amending Act. E
The issue involved in this appeal was whether, subsequent to the
insertion of Section 21(3D) by the Amending Act 25of1976 in the Andhra
Pradesh Sugarcane (Regulation of Supply & Purchase) Act, 1971, any
interest could be levied on arrears of tax levied under Rule 45(4) of the
Andhra Pradesh (Regulation of Supply & Purchases) Rules, 1961~ The High F
Court was of the view that the amendment was applicable to the 1975-76
crushing season only and held that interest was leviable. Hence the present
appeal.

The appellants contended that by reason of clause (a) of sub-section 3D G
of Section 21 of the Act, as ame11ded, sub-sections (4) & (5) thereof were not
to apply in respect of purchases sugarcane made on or after the date of
commencement of the Amending Act, which was 29-12-1975. It was also
contended that sub-section (5) of section 21 was the provision which required
payment of interest on arrears of tax and having regard to the inapplicability
of that provision for the relevant period, no interest could be levied. H
925
:I
f
•
•l
\.

926 SUPREME COURT REPORTS [1999] 2 S.C.R.

A Allowing the appeal, this Court

HELD : The A.P. Sugarcane (Regulation of Supply and Purchase) Act,
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1961 is a taxing statute and a taxing statute must be interpreted as it reads,
with no additions and no subtractions, on the ground of legislative intendment
or otherwise. On the plain wording of clause (a) of sub-section (3D) of
B Section 21 of the Act as amended, it is difficult to agree with the High Court.
The provisions thereof say that sub-section(S) shall not apply in relation to
tax levied under sub-section (1) of Section 21 on purchase of sugarcane. The
provisions came into force on the date of the commencement of the Amending
Act. The provisions are open ended and are intended to apply upon the
C commencement of the Amending Act with no limitation in time. There being
no substantive provision in the Act for the levy of interest on arrears of tax
--
that applied to purchases of sugarcane made subsequent to the date of
commencement of the Amending Act, no interest thereon could be so levied
on the basis of the application of Rule 45 of the A.P. Sugarcane (Regulation
of Supply and Purchase) Rules, 1961 or otherwise. [928-C-D-F]
D
on.
India Carbon Ltd. & Ors. v. State of Assam, (1997] 6 SCC 479, relied

J.K. Synthetics v. CTO, [1994] 4 SCC 276, referred to.
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E CIVIL APPELLATE JURISDICTION : Civil Appeal No. 903 of 1984
Etc. Etc.

From the Judgment and Order dated 23.9.82 of the Andhra Pradesh High
Court in W.P. No. 3063of198(
-
F Mrs. K. Amreshwari, Anil B. Divan, Ms. Sudha Gupta, G. Venkatesh,
B.K. Rao, T.V. Ratnam, Syed Naqvi, Mrs. Urmila Sirur, G. Narasimhulu, K. Ram
Kumar, Ms. Asha G. Nair, Shantinarayan, Sridhar, V. Krishnamurthy, G. Prabhakar
and Vinoo Bhagat for the appearing parties.

The Judgment of the Court was delivered by
G
BHARUCHA, J. We are concerned with the interpretation of Section 21
of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act,
1961, as amended by Act 25 of 1976. Principally, the provisions to be dealt --
with are sub-sections 3D, 4 and 5 of Section 21 which read thus:

H "(3-D) In relation to the tax levied under sub-section (I) and in
V.V.S. SUGARS v. GOVT. OF A.P. [BHARUCHA, J.] 927
respect of purchase of sugarcane on or after the date of commencement A
as aforesaid :- ·

(a) Sub-sections (4) and (5) shall not apply, and the tax shall be
deemed due date of purchase of sugarcane or the date of
commencement as aforesaid, whichever is later,
B
(b) Sub-section (3-C) shall apply with the modification that where
the assessing authority is satisfied that the occupier of a factory or
owner of khandasari unit has removed or cause to be removed any
sugar in contravention of the provision of this section or has failed
to account fully for the sugar produced in the factory or khandasari
unit or deposited by him under the provision to sub-section (3), the C
person liable to pay the tax shall in addition to the amount payable
under sub-section (3) in respect of the quantity of sugar so removed
or caused to be removed or unaccounted for, be also liable to pay by
way of penalty a further sum not exceeding one hundred percent of
the sum so payable; D
(c) The provisions of the sub-section shall be without prejudice
to the provisions of sub-section (3-C).

(4) The tax payable under sub-section (1) shall be levied and
collected from the occupier of the factory 'or owner of the khandasari
unit' in such manner and by such authority as may be prescribed. E
(5) Arrears of tax shall carry interest at such rate as may be
prescribed."

The question is whether, subsequent to the said provisions as amended,
any interest could be levied on arrears of tax under sub-rule (4) of Rule 45 F
of the Andhra Pradesh Sugarcane (Regulation of Supply & Purchase) Rules,
1961. Rule 45, so far as it is relevant, reads thus :

"45(3) Any amount of tax still remaining unpaid, as finally arrived
at, at the end of the crushing season on the revised assessment of
tax worked out and communicated by the assessing authority under G
sub-section (3-8) of Section 21, shall be treated as arrear under. sub-
section (5) of Section 21 of the Act.

(4) Such arrears shall carry interest at the rate of 16 percent per
annum from the date following the date of closure of crushing till the
amount is finally paid." H
928

--
SUPREME COURT REPORTS [1999) 2 S.C.R.

A The argument on behalf of the appellants is that by reason of clause
(a) of sub-section 3D of Section 21, as amended, sub-sections (4) & (5)
thereof are not to apply in respect of purchases of sugarcane made on or after
the date of the commencement of the Amending Act, which was 29th December,
1975; that sub-section (5) of Section 21 was the provision that required the
payment of interest on arrears of tax; and that, having regard to the
B inapplicability of that provision for the relevant period, no interest could be
levied. The High Court in the principal judgment, which was followed in the
subsequent orders, took the view that the scope of sub-section 3D of Section
21 and its application was restricted to the crushing season 197 5-76 during
which the Amending Act had come into force.
c The said Act is a taxing statute and a taxing statute must be interpreted
as it reads, with no additions and no subtractions, on the ground of legislative
intendment or otherwise. ·

On the plain wording of clause (a) of sub-sectio"n (3D) of Section 21 of
D

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the Act as amended, we find it difficult to agree with the High Court. The
provisions thereof say that sub-section (5) shall not apply in relation to tax
levied under sub-section ( l) of Section 21 on purchase of sugarcane. The
provisions came into force on the date of the commencement of the Amending
Act. The provisions are open ended and are intended to apply upon the
commencement of the Amending Act with no limitation in time.
E This Court in India Carbon Limited & Ors. v. State of Assam, [1997]
6 SCC 479 has held, after analysing the Constitution Bench judgment in J.K.
Synthetic v. CTO, [1994] 4 SCC 276, that interest can be levied and charged
on delayed payment of tax only if the statute that levies and charges the tax
makes a substantive provision in· this behalf. There being no substantive
F provision in the Act for the levy of interest on arrears of tax that applied to
purchases of sugarcane made subsequent to the date of commencement of
the Amending Act, no interest thereon could be so levied, based on the
application of the said Rule 45 or otherwise.
The appeals are allowed. The judgments and orders under appeal are
G set aside.
This Court, by order dated 23rd Novemeber, 1983, had refused stay of
the judgment and orders under appeal and had directed that, in the event the
appeals succeeded and the respondents were held liable to refund the amounts
recovered on account ofrefusal of stay, the entire amounts should be refunded
H · within three months from the date of the order with 18% interest from the date
V.V.S, SUGARS v.GOVT. OF A.P. [BHARUCHA, J.] 929

of the payment till the amounts were refunded. The appeals having succeeded, A.
the respondents shall refund the amounts that the appellants have paid within
three months from today with interest at the rate of 18% per annum from the
... date of payment till the refund is made. No order as to costs.

R.C.K. Appeal allowed.
B

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