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The Commissioner of Sales Tax Vs. Jaynes Cheap Stores Supply - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtDelhi High Court
Decided On
Case NumberSales Tax Reference No. 2 of 1970
Judge
Reported inILR1971Delhi529
ActsCentral Sales Tax Act, 1956 - Sections 9(3); Bengal Finance (Sales Tax) Act, 1941 - Sections 11(1)
AppellantThe Commissioner of Sales Tax
RespondentJaynes Cheap Stores Supply
Advocates: S.S. Chadha, Adv
Cases ReferredAuto Pins (India) v. The State of Haryana and
Excerpt:
.....to delhi--whether can be invoked for imposing penalty for late or not filing of returns under central sales tax act, 1956, section 9(3). ; where, a dealer registered under the central sales tax act 1956, filed returns late and could riot offer any explanationn for the default, and the sales tax officer imposed a penalty under section 9(3) of central sales tax act, 1956 read with section 11(1) of the bengal finance (sales tax) act 1951, as extended to delhi : ; that section 9(3) of the central sales tax act 1956 not only authorised the sales tax officer appointed under the delhi act to assess, collect and enforce payment of any tax including the penalty payable by a dealer under the central act in the same manner as the tax on the sales or purchases of goods under the general sales..........cheap store supply (herein- b after referred to as the assessed) is a registered dealer under the central sales tax act, 1956 (hereinafter referred to as the central act) carrying on business in supply of goods to the government against the orders placed by them and also of manufacturing, supplying and fixing of 'khats tatties' on contract basis. the assessed had to file quarterly returns for the assessment year 1961-62. he failed to submit the said returns within the prescribed time and filed all the four returns for the year on 2nd june 1962. the assessed also did not offer any explanationn for not filing the returns within the prescribed time. thereforee, the sales-tax officer imposed a penalty of rs. 100.00 under section 9 of the central act read with section 11(1) of the bengal.....
Judgment:

M.R.A. Ansari, J.

(1) M/S. Jaynes Cheap Store Supply (herein- B after referred to as the assessed) is a registered dealer under the Central Sales Tax Act, 1956 (hereinafter referred to as the Central Act) carrying on business in supply of goods to the Government against the orders placed by them and also of manufacturing, supplying and fixing of 'khats tatties' on contract basis. The assessed had to file quarterly returns for the assessment year 1961-62. He failed to submit the said returns within the prescribed time and filed all the four returns for the year on 2nd June 1962. The assessed also did not offer any Explanationn for not filing the returns within the prescribed time. thereforee, the Sales-tax Officer imposed a penalty of Rs. 100.00 under section 9 of the Central Act read with section 11(1) of the Bengal Finance (Sales Tax) Act, 1941 as extended to Delhi (hereinafter referred to as the Delhi Act). The appeal filed by the assessed before the Assistant Commissioner and the revision filed by him before the Additional Commissioner of Sales-tax, Delhi, against the levy of this penalty were unsuccessful. The assessed, thereforee, preferred a second revision before the Additional District Judge, Delhi, and contended that there was no provision in the Central Act for the levy of penalty for the late filing of returns and that, thereforee, the levy of penalty against the assessed was illegal. This contention found favor with the learned Additional District Judge and following the decision of the Madras E High Court in the case of D. H. Shah and Co. v. The State of Madras, (1967) 20 S.T.C. 146 he held that the imposition of the penalty against the assessed under the Central Act was illegal. At the instance of the Commissioner of Sales-tax, Delhi, the Lt. Governor, Delhi, has referred the following question to this Court under section 21 of the Delhi Act:-

'WHETHERthe powers for imposing penalty under section 11 of the Bengal Finance (Sales Tax) Act, 1941 as extended to the Union Territory of Delhi can be invoked for imposing penalty for late or non-filing of the returns under the Central Sales Tax Act, 1956 in view of the provision contained in section 9(3) of the Central Sales Tax Act, 1956.'

Section 9(3) of the Central Act reads as follows :-

'(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 relating to returns, appeals, reviews, revisions, references, penalties, and compounding of offences, shall apply accordingly.'

(2) The scope of this section has to be considered in the light of the purpose for which the Central Act was passed. By the time the Central Act was enacted, there already existed in different States sales tax laws containing detailed provisions for the assessment and collection of sales tax and there was also an elaborate machinery for enforcing the payment of the sales tax. The Central Act, thereforee, provided for the utilisation of that existing machinery and the provisions of the sales tax laws of the various States for the effective realisation of the tax payable under the Central Act. It was found necessary to duplicate the existing machinery of the various States for the purpose of the enforcement of the Central Act. The existing machinery of the States including the various tiers of assessing authorities was, thereforee, authorised to assess as well as collect the tax payable under the Central Act. Even as regards the filing of assessments, revisions and reference. the Central Act did not make any separate provision and the existing provisions in the State Acts were made applicable for that purpose. It is in this background that the scope of section 9(3) of the Central Act has to be considered.

(3) Section 9(3) of the Central Act thereforee not only authorised the sales tax officer appointed under the Delhi Act to assess, collect and enforce payment of any tax including the penalty payable by a dealer under the Central Act in the same manner as the tax on the sales or purchases of goods under the general sales tax laws of the State was assessed, paid and collected, but also conferred upon him the following power :-

'ANDfor 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 relating to returns, appeals,, reviews, revisions, references, penalties, and compounding of offences, shall apply accordingly.'

(4) So far as the present case is concerned, section 9(3) of the Central Act does authorise the sales tax officer appointed under the Delhi Act to assess the assessed in the same manner as under the Delhi Act and for that purpose, the said officer could also exercise all the powers he had under the Delhi Act relating to the filing of returns by the assessed. The words 'assess' and 'assessment' are not defined either in the Central Act or in the Delhi Act nor are they defined in the Income-tax Act on the basis of which the Sales-tax Acts--Central or State-are modelled. In Commissioner of Income-tax v. Khemchand Ramdas, ( 1938) (6) I.T.R. 414 the Privy Council observed that 'the word 'assessment' is used in this Act (Income-tax 1922) as meaning sometimes the computation of income, sometimes the determination of the amount of tax payable, and sometimes the procedure laid down in the Act for imposing liability upon the tax-payer'. In another case, namely, Seth Badridas Daga and another v. Commissioner of Income-fax, (1949) 17 I.T.R. 209 3 the Privy Council held that the words 'assess' and 'assessment' referred primarily to the computation of the amount of income.

(5) Assessment, whether understood in its narrower or wider meaning, has necessarily to begin with the filing of the return by the assesses; If the assessed fails to file the return, the sales-tax officer should be able to compel the assessed to file the return so that he may make the assessment on the assessed. One of the methods by which the sales- tax officer can compel the assessed to file the return is to levy a penalty if the assessed fails to file the return within the prescribed time. thereforee, the power to levy a penalty for the late filing of the return is implied in the power to assess conferred upon the sales-tax officer under section 9(3) of the Central Act, as observed by the Supreme Court in the case of Commissioner of Income-tax A.P. v. M/s. Bhai Dadabhai and Co., : [1961]42ITR123(SC) , 'the imposition of penalty is a necessary concomitant or incident of the process of assessment, levy and collection of tax. It would, thereforee, follow that even though there is no special provision in the Central Act for the levy of penalty for late filing of returns, the general power conferred by section 9(3) of the Central Act on the assessing authorities under the Delhi Act, by implication, authorises the salestax officer to levy a penalty for the late filing of the returns under section 9(3) of the Central Act read with section 11(1) of the Delhi Act.

(6) We are supported in our view by the following decisions :-

1.The decision of the Mysore High Court in K. V. Adinarayana Setty v. Commercial Tax Officer (1963) 14 S.T.C. 587,(s) 2. The decision of the Madhya Pradesh High Court in The Commissioner of Sales Tax v. M/s. Kantilal Mohanlal & Brothers, : AIR1968MP20 . The decision of the Punjab & Haryana High Court in M/s. Auto Pins (India) v. The State of Haryana and others, .

(7) Although these cases did not relate to the levy of penalty for late filing of returns, the principle laid down in these cases is applicable to the present case. With respect, we are unable to agree with the contrary view expressed by Madras High Court in the case relied upon by the learned Additional District Judge and followed by him in preference to the decision of the Mysore, Madhya Pradesh and Punjab & Haryana High Courts.

(8) The question referred to us is, thereforee, answered in the affirmative, i.e., in favor of the Department and against the assessed. There shall, however, be no order as to costs.


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