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Commissioner of Sales Tax Vs. Janta Furniture Mart - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAllahabad High Court
Decided On
Case NumberSales Tax Reference No. 123 of 1970
Judge
Reported in[1973]31STC392(All)
AppellantCommissioner of Sales Tax
RespondentJanta Furniture Mart
Appellant AdvocateStanding Counsel
Respondent AdvocateR.R. Agarwal, Adv.
Excerpt:
- - ? 2. the reference relates to the year 1960-61. 3. the respondent, janta furniture mart, deoria, was visited with a penalty for its failure to instal a diesel engine and a saw machine, obtained against 'c' forms, within a year. 489. in our opinion, the decision in that case is clearly distinguishable......that the authorities empowered to assess. reassess, collect and enforce payment of tax under the state sales tax law shall on behalf of the government of india assess, reassess, collect and enforce payment of tax, including penalty payable by a dealer under the central sales tax act as if the tax or penalty payable by such dealer under the act was a tax or penalty payable under the state sales tax act. it specifically provides that for that purpose the authority may exercise all or any of the powers it enjoys under the state sales tax act and the provisions of such act, including the provisions relating to penalties, would apply accordingly. it is clear, therefore, that not only is the authority, who will impose the penalty designated but the scope of his powers is also circumscribed......
Judgment:

R.S. Pathak, J.

1. At the instance of the Commissioner of Sales Tax the Additional Judge (Revisions), Sales Tax, has referred the following question :

Whether the authority under Section 10A of the Central Sales Tax Act shall not impose any penalty without the previous permission of the Commissioner, Sales Tax, U. P.

2. The reference relates to the year 1960-61.

3. The respondent, Janta Furniture Mart, Deoria, was visited with a penalty for its failure to instal a diesel engine and a saw machine, obtained against 'C' forms, within a year. Apparently, the penalty was imposed under Section 10-A(l) by reference to the offence mentioned in Section 10(d) of the Central Sales Tax Act. Section 10(d) makes a person punishable, if after purchasing any goods for any purpose specified by Section 8(3)(b) he fails, without reasonable excuse, to make use of the goods for such purpose. The assessee appealed against the order and the appeal was allowed by the Assistant Commissioner (Judicial), Sales Tax, on two grounds, one being that the assessee had not been allowed an opportunity of showing cause against the penalty and the other being that the penalty proceedings were taken without the prior sanction of the Commissioner of Sales Tax. A revision application was filed by the Commissioner and was rejected by the Additional Revising Authority. The Additional Revising Authority disagreed with the view taken by the Assistant Commissioner (Judicial) that the assessee had no opportunity to show cause against the penalty, but he affirmed the view that before the penalty could be imposed, the permission of the Commissioner had to be obtained. And now this reference has been made.

4. The provisions of the U. P. Sales Tax Act have been imported into the Central Sales Tax Act in certain matters. At the time when the penalty order was made, Section 9(3) of the Central Sales Tax Act provided:

9. (3) The authorities for the time being empowered to assess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India and subject to any rules made under this Act, assess, collect and enforce payment of any tax, including any penalty, payable by a dealer under this Act in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is assessed, paid and collected; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, appeals, reviews, revisions, references, penalties and compounding of offences shall apply accordingly:Provided that if in any State or part thereof there is no general sales tax law in force, the Central Government may, by rules made in this behalf, make necessary provision for all or any of the matters specified in this sub-section and such rules may provide that a breach of any rule shall be punishable with fine which may extend to five hundred rupees; and where the offence is a continuing offence, with a daily fine which may extend to fifty rupees for every day during which the offence continues.

5. Recently, however, Parliament enacted the Central Sales Tax (Amendment) Act, 1969, which has substituted a new provision in place of the original Section 9. The newly enacted section takes effect retrospectively as from the date of the commencement of the principal Act and Sub-section (2) thereof provides :

(2) Subject to the other provisions of this Act and the Rules made thereunder, the authorities for the time being empowered to assess, reassess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India, assess, reassess, collect and enforce payment of tax, including any penalty, payable by a dealer under this Act as if the tax or penalty payable by such a dealer under this Act is a tax or penalty payable under the general sales tax law of the State; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, provisional assessment, advance payment of tax, registration of the transferee of any business, imposition of the tax liability of a person carrying on business on the transferee of, or successor to, such business, transfer of liability of any firm or Hindu undivided family to pay tax in the event of the dissolution of such firm or partition of such family, recovery of tax from third parties, appeals, reviews, revisions, references, refunds, penalties, compounding of offences and treatment of documents furnished by a dealer as confidential, shall apply accordingly :Provided that if in any State or part thereof there is no general sales tax law in force, the Central Government may, by rules made in this behalf, make necessary provision for all or any of the matters specified in this sub-section.

6. Analysed, the sub-section provides that the authorities empowered to assess. reassess, collect and enforce payment of tax under the State sales tax law shall on behalf of the Government of India assess, reassess, collect and enforce payment of tax, including penalty payable by a dealer under the Central Sales Tax Act as if the tax or penalty payable by such dealer under the Act was a tax or penalty payable under the State Sales Tax Act. It specifically provides that for that purpose the authority may exercise all or any of the powers it enjoys under the State Sales Tax Act and the provisions of such Act, including the provisions relating to penalties, would apply accordingly. It is clear, therefore, that not only is the authority, who will impose the penalty designated but the scope of his powers is also circumscribed. The authority empowered to impose the penalty under the Central Sales Tax Act is the authority who is empowered to impose a penalty under the State Sales Tax Act. The powers which he enjoys for the purpose of imposing a penalty under the Central Sales Tax Act are the same powers and subject to the same limitations as those which he enjoys in relation to a penalty under the State Sales Tax Act. The power to impose a penalty has been conferred by Section 15-A of the U. P. Sales Tax Act. The authority indicated there is the assessing authority. At the time when the penalty was imposed in the present case, Section 15-A(5) of the U. P. Sales Tax Act provided as follows:

The assessing authority shall not impose any penalty under this section, without the previous approval of the Commissioner of Sales Tax or such other officer, as may by general or special order, be authorised in this behalf by the State Government.

7. The power to impose a penalty under Section 15-A vested in the assessing authority is subject to the limitation that he must, before exercising that power, obtain the previous approval of the Commissioner of Sales Tax or an officer authorised in that behalf by the State Government. The limitation upon the exercise of that power is necessarily associated with the grant of the power and it cannot be said, in our opinion, that the two can be considered apart. That being so, it seems clear to us that when the assessing authority exercises his power under Section 15-A of the U. P. Sales Tax Act for the purpose of imposing a penalty under Section 10A of the Central Sales Tax Act, by virtue of the operation of Section 9 of the Central Sales Tax Act, it must be taken that he was subject to the limitation contained in Section 15-A(5) mentioned above. Inasmuch as the condition contained in Section 15-A(5) was not fulfilled, we hold that the proceedings taken by the assessing authority for imposing the penalty in question on the assessee are proceedings without jurisdiction.

8. Reliance is placed by, the learned counsel for the Commissioner on Guldas Narasappa Thimmiah Oil Mills v. Commercial Tax Officer [1970] 25 S.T.C. 489. In our opinion, the decision in that case is clearly distinguishable. The question raised there was whether in the absence of an offence created by the relavant provisions of the Central Sales Tax Act, it was permissible to proceed against a dealer in respect of an offence mentioned in the State Sales Tax Act. The learned Judges proceeded on the view that the creation of an offence was a substantive matter and held that since Section 9(2) of the Central Sales Tax Act did not incorporate by reference any substantive provision of the State Act, the question must be answered in the negative. We are of the opinion that the provision in Section 15-A(5) of the U. P. Sales Tax Act is not a substantive provision in that sense at all.

9. The question referred is answered in favour of the assessee and against the department. The assessee is entitled to its costs which we assess at Rs. 100. Counsel's fee is assessed in the same figure.


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