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Commissioner of Sales Tax Vs. Sohanlal Sureshchandra - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMadhya Pradesh High Court
Decided On
Case Number Miscellaneous Civil Case No. 94 of 1973
Judge
Reported in1979MPLJ547; [1979]43STC229(MP)
AppellantCommissioner of Sales Tax
RespondentSohanlal Sureshchandra
Appellant Advocate M.V. Tamaskar, Adv.
Respondent Advocate K.M. Agrawal, Adv.
Cases ReferredCommissioner of Sales Tax v. H.M. Esufali H.M. Abdulalfi
Excerpt:
.....is liable to be set aside. - - if the commissioner or the appellate authority in the course of any proceeding under this act, is satisfied that a dealer has deliberately concealed his turnover in respect of any goods or furnished & false return, the commissioner or the appellate authority, as the case may be, may after giving the dealer a reasonable opportunity of being heard, direct that the dealer shall, in addition to the tax payable by him, pay by way of penalty a sum not exceeding the amount of the tax which would have been avoided if the return furnished by the dealer had been accepted as correct. , where the assessing authority made an honest mistake and failed to assess the correct amount of tax......periods. thereafter, there was a raid of its premises in which duplicate account books were found. reassessment proceedings were taken under section 19(1) of the act. the assessing authority imposed penalty both under section 19(1) and section 43(1) of the act. in appeal, the appellate assistant commissioner set aside the penalty under section 43(1) on the ground that when penalty was imposed under section 19(1), it was not proper to impose penalty under section 43(1) also. the commissioner of sales tax took up the appellate orders in revision and quashed them and maintained the penalty under section 43(1). against the orders of the commissioner, there were appeals to the sales tax appellate tribunal (board of revenue). the tribunal took the view that when penalty was imposed under.....
Judgment:

G.P. Singh, C.J.

1. This judgment shall also dispose of Misc. Civil Cases Nos. 95 and 99 both of 1973.

2. These are three consolidated references under Section 44 of the Madhya Pradesh General Sales Tax Act, 1958. The periods of assessment are 1958-59, 1959-60 and 1960-61. The dealer was assessed to sales tax for these periods. Thereafter, there was a raid of its premises in which duplicate account books were found. Reassessment proceedings were taken under Section 19(1) of the Act. The assessing authority imposed penalty both under Section 19(1) and Section 43(1) of the Act. In appeal, the Appellate Assistant Commissioner set aside the penalty under Section 43(1) on the ground that when penalty was imposed under Section 19(1), it was not proper to impose penalty under Section 43(1) also. The Commissioner of Sales Tax took up the appellate orders in revision and quashed them and maintained the penalty under Section 43(1). Against the orders of the Commissioner, there were appeals to the Sales Tax Appellate Tribunal (Board of Revenue). The Tribunal took the view that when penalty was imposed under Section 19(1), no penalty could be imposed under Section 43(1) for the same default. The question of law referred in these references is as follows:

Whether in reassessment proceedings under Section 19(1) of the M. P. General Sales Tax Act, 1958, in addition to a penalty under Section 19(1), a penalty can be imposed under Section 43(1) also if it is found that the turnover taxed in reassessment proceedings was deliberately concealed by the assessee at the time of the original assessment proceedings

3. The provisions for penalty occur in 17(3), 19(1) and 43 of the Act. These provisions read as follows :

17. (3) If a dealer fails without sufficient cause to comply with the requirements of a notice issued under Sub-section (1) or a registered dealer fails without sufficient cause to furnish under the said sub-section his return for any period, the Commissioner may, after giving such dealer a reasonable opportunity of being heard, direct him to pay, by way of penalty, a sum not exceeding one-fourth of the amount of the tax which may be assessed on him under Section 18 or where no tax is payable a sum not exceeding one hundred rupees.

19. (1) Where an assessment has been made under this Act or any Act repealed by Section 52 and if for any reason any sale or purchase of goods chargeable to tax under this Act or any Act repealed by Section 52, during any period has been under-assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom, the Commissioner may, at any time within five calendar years from the date of order of assessment, after giving the dealer a reasonable opportunity of being heard and after making such enquiry as he considers necessary, proceed, in such manner as may be prescribed, to reassess the tax payable by such dealer and the Commissioner' may direct that the dealer shall pay, by way of penalty in addition to the amount of tax so assessed, a sum not exceeding that amount:

Provided that in the case of an assessment made under any Act repealed by Section 52, the period for reassessment on the ground of under-assessment, escapement or wrong deduction shall be as provided in such Act notwithstanding the repeal thereof.

43. Power of Commissioner or appellate authority to impose penalty.- If the Commissioner or the appellate authority in the course of any proceeding under this Act, is satisfied that a dealer has deliberately concealed his turnover in respect of any goods or furnished & false return, the Commissioner or the appellate authority, as the case may be, may after giving the dealer a reasonable opportunity of being heard, direct that the dealer shall, in addition to the tax payable by him, pay by way of penalty a sum not exceeding the amount of the tax which would have been avoided if the return furnished by the dealer had been accepted as correct.

4. A perusal of these provisions will show that whereas Sections 17(3) and 43 of the Act describe the acts or omissions which make a dealer liable for penalty, no such description occurs in Section 19. Section 19 empowers the Commissioner to reassess the tax in cases mentioned in that section and to direct that the dealer shall pay, by way of penalty in addition to the amount of tax so assessed, a sum not exceeding that amount. Reassessment under Section 19 can be made when for any reason any sale or purchase of goods chargeable to tax has been under-assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom. The existence of the grounds for reassessment may be because the dealer manipulated to conceal his real turnover. But these grounds may arise also in cases where the dealer made no default and was not guilty of any dishonest or negligent act, e. g., where the assessing authority made an honest mistake and failed to assess the correct amount of tax. We cannot read Section 19 to mean that in every case of reassessment the dealer becomes liable to pay penalty. Penalty is generally imposed for some default, negligence or contumacious conduct of the dealer. The legislature normally does not provide for penalty for innocent acts. If it is held that in every case of reassessment the dealer can become liable for penalty under Section 19(1), it would lead to serious hardship. The language used in Section 19 is not that express to compel us to take that view. What appears to us is this, that Section 19 does not provide for the circumstances in which penalty may be imposed on the dealer. It only empowers the Commissioner to impose penalty at the time of reassessment, if under any other provision of the Act the dealer had become liable for penalty. For example, if at the time of reassessment it is found that the dealer had concealed his turnover or aggregate of the amount of purchase prices, the Commissioner may impose the penalty incurred by the dealer under Section 43 at the time of reassessment under Section 19. The penalty imposed under Section 19 in such cases would be really one under Section 43. It cannot, therefore, be said that the Commissioner can impose penalty at the time of reassessment both' under Section 19 and Section 43. There is, however, one distinction which must be noticed. Under Section 19 the maximum amount of penalty provided is a sum not exceeding the amount of tax assessed, but under Section 43 the maximum amount of penalty is a sum not exceeding the amount of the tax which would have been avoided if the return furnished by the dealer had been accepted as correct. Therefore, when penalty is imposed at the time of reassessment, the Commissioner will have jurisdiction to impose penalty up to the maximum limit prescribed by Section 19; whereas, if penalty under Section 43 is imposed at the time of assessment, the maximum limit as prescribed by that section has to be adhered to. To sum up, our conclusion is that Section 19 only empowers the Commissioner to impose penalty at the time of reassessment and fixes the maximum amount of that penalty. The section does not provide for the acts or omissions which make the dealer liable for penalty. These acts or omissions are provided in other sections of the Act. If the Commissioner, while making reassessment, comes to the conclusion that the dealer is liable for payment of penalty under Section 43, he can impose penalty under Section 19. But as the penalty imposed under Section 19 is not independent of Section 43, the Commissioner will have no power to impose separate penalty under Section 43.

5. Learned counsel for the department has strongly relied upon the case of Oveekee Textiles v. Deputy Commercial Tax Officer [1971] 27 S.T.C. 439. This case is not of assistance because Section 16(2) of the Madras Act, which corresponds to Section 19(1) of our Act, is differently worded. Section 16(2) of the Madras Act lays down the conditions which make the dealer liable for penalty at the time of reassessment. As earlier pointed out, Section 19(1) of our Act does not contain these conditions. Learned counsel further relied upon Ramakutty Nadar v. State of Madras [1973] 31 S.T.C. 44, which is also a case of the Madras High Court in which the earlier Madras case [1971] 27 S.T.C. 439 was followed. We were also referred to the decision of the Supreme Court in Commissioner of Sales Tax v. H.M. Esufali H.M. Abdulalfi [1973] 32 S.T.C. 77 (S.C.). We do not, however, find in this case anything helpful for deciding the question with which we are concerned in these references.

6. For the reasons stated above, our answer to the question referred to us is that if penalty is imposed under Section 19(1) for concealment of turnover or for filing a false return, no separate penalty can be imposed under Section 43(1) in reassessment proceedings. There shall be no order as to costs of these references.


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