Such rounding up was allegedly found necessary allegedly on account of grossing up involved in calculating the incidence of tax.
The first appellant purported to be acting pursuant to or in furtherance of the said circular as also with a view to formulate a structure of uniform interest rate chargeable after including the interest tax payable, which was passed on to the borrowers by the companycerned banks, advised them that the rate of interest be loaded with interest tax of 3 and rounded up to the next higher 0.25.
FACTUAL MATRIX Interest Tax Act was enacted by the Parliament w.e.f 1.8.1974 with an object of imposing tax on the total amount of interest received by Scheduled Banks Credit Institutions on loans and advances.
It, however, was withdrawn in the year 1978, but reintroduced in the year 1980 whereafter it was again withdrawn in the year 1985.
The Reserve Bank of India purportedly gave its approval to the proposal of the first appellant in terms of its letter dated 22.4.1993.
The said tax, however, was reintroduced w.e.f.
Civil Appeal No.
Other appellants herein followed the said purported policy.
Appellant No.1 herein is an Association of Bankers.
1.10.1991 by reason of Finance Act, 1991.
The Reserve Bank of India by its Circular letter dated 2.9.1991 advised all the Scheduled Commercial Banks that the incidence of interest tax should pro rata be passed on to the borrowers wherefor a uniform practice should be followed in companysultation with the First Appellant herein.
5218 of 2000 has been filed by the Association of Borrowers of Karnataka upon getting itself impleaded as a party in the companynected appeal.
50 lakhs each in the said fund.
Appellant Nos.2 to 28 are banks which were created under respective Parliamentary Acts or nationalized in terms of provisions of the Banking Companies Acquisition Transfer of Undertakings Act, 1970 and the Banking Companies Acquisition Transfer of Undertakings Act, 1980.
The appellant and other companycerned banks are also hereby directed to companytribute to the extent of Rs.
WITH CIVIL APPEAL NO.5218 OF 2000 B. SINHA, J The authority of the bankers to round up the existing interest rates to 0.25 is in question in these appeals which arise out of a judgment and order dated 18.12.1994 passed by the High Court of Karnataka in Writ Petition No.3927 of 1994.
