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Commissioner of Sales Tax Vs. New Central Jute Mills Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAllahabad High Court
Decided On
Case NumberSales Tax Revision No. 419 of 1979
Judge
Reported in[1980]45STC360(All)
AppellantCommissioner of Sales Tax
RespondentNew Central Jute Mills Co. Ltd.
Appellant AdvocateStanding Counsel
Respondent AdvocateNone
DispositionPetition dismissed
Excerpt:
.....return, which is one circumstance in which penalty can be imposed under section 15-a(1)(a). the revising authority has found that the assessee was claiming an adjustment of an amount under the bona fide belief that it was due to him and, as such, did not deposit the tax. 15-a(1) if the assessing authority is satisfied that any dealer or other person -(a) has, without reasonable cause, failed to furnish the return of the turnover or to furnish it within the time allowed and in the manner prescribed, or to deposit the tax due under this act before furnishing the return or along with the return, as required under the provisions of this act. 2. as the words 'reasonable cause' occur in the opening part of section 15-a(1)(a), and thereafter the various cases in respect of which penalty can..........return, which is one circumstance in which penalty can be imposed under section 15-a(1)(a). the revising authority has found that the assessee was claiming an adjustment of an amount under the bona fide belief that it was due to him and, as such, did not deposit the tax. in his view, it constituted a reasonable cause for not depositing the tax along with the return. sri v.d. singh, the counsel for the department, urged that the words 'reasonable cause' qualify the first part of section 15-a(1)(a) and do not apply to the latter part. this argument is not borne out by the provisions. section 15-a(1)(a) is to the following effect:15-a(1) if the assessing authority is satisfied that any dealer or other person --(a) has, without reasonable cause, failed to furnish the return of the.....
Judgment:

C.S.P. Singh, J.

1. The Sales Tax Officer has imposed penalty under Section 15-A(1)(a) of the U.P. Sales Tax Act. At the time the penalty was imposed, there was no provision corresponding to Section 15-A(1)(a) in Section 10A of the Central Sales Tax Act. The Parliament amended Section 9, and introduced Sub-section (2A) with retrospective effect, as a result of which, the penalty could be justified by reference to the State Act also. Under Section 16-A, penalty can be imposed in the various circumstances set out therein, in case the assessee does not have reasonable cause for doing the omissions contemplated by Section 15-A(1)(a). In the present case, the assessee had failed to deposit the tax along with the return, which is one circumstance in which penalty can be imposed under Section 15-A(1)(a). The revising authority has found that the assessee was claiming an adjustment of an amount under the bona fide belief that it was due to him and, as such, did not deposit the tax. In his view, it constituted a reasonable cause for not depositing the tax along with the return. Sri V.D. Singh, the counsel for the department, urged that the words 'reasonable cause' qualify the first part of Section 15-A(1)(a) and do not apply to the latter part. This argument is not borne out by the provisions. Section 15-A(1)(a) is to the following effect:

15-A(1) If the assessing authority is satisfied that any dealer or other person --

(a) has, without reasonable cause, failed to furnish the return of the turnover or to furnish it within the time allowed and in the manner prescribed, or to deposit the tax due under this Act before furnishing the return or along with the return, as required under the provisions of this Act.

2. As the words 'reasonable cause' occur in the opening part of Section 15-A(1)(a), and thereafter the various cases in respect of which penalty can be imposed are set out, and as the provision is of a penal nature, it will not be proper to confine the words 'reasonable cause' only to the first part of Sub-clause (a). Thus, the assessee cannot be held liable for not depositing the tax, in case he shows a reasonable cause for failure to deposit the amount due. The question as to whether there is a 'reasonable cause' is essentially one of fact in the present case. It cannot, therefore, be said that the view taken by the revising authority was arbitrary.

3. Sri V.D. Singh also contended that Section 9(2A) read with Section 9 of the Validating Act of 1976 validated the penalty order and, as such, the revising authority could not have set aside the penalty order on the ground that a reasonable cause existed for not making the deposit. The argument is unsound. All that Section 9 of the Validating Act does is to introduce the provision relating to penalty in the general sales tax law of the State, in the Central Act, and Section 9(2) of the Validating Act validates the penalty orders passed earlier on the view that Section 9 of the Central Act authorised to impose penalty under the general sales tax law of the State. This provision does not validate orders, which are unjustified even under the penalty provisions of the State law. Under Section 15-A(1)(a), a penalty for not depositing the tax could be imposed only in case the assessee did not have reasonable cause for not making the deposit. In the present case, it has been found by the revising authority that there was a reasonable cause for not depositing the tax and, as such, the order passed by the Sales Tax Officer was invalid. Section 9(2) of the amending Act does not possibly cure this defect.

4. It was also contended that the revising authority could not set aside the penalty order in view of Section 9(2). Section 9(2) of the Act does not take away the right of appeal or revision, which an assessee has under the general sales tax law of the State. It thus did not impose any restriction on the jurisdiction of the appellate and revisional powers in respect of the penalty orders passed by the Sales Tax Officer. The appellate and the revising authorities could on an appeal or revision go into the validity of the penalty order, and examine as to whether it was justified under the penalty provisions of the State law and, in the event of their being unwarranted, they could in exercise of the appellate and revisional powers set them aside. This is precisely what the revising authority has done in the case.

5. The revision fails and is dismissed. There shall be no order as to costs.


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