1967 (4) TMI 137 - SC - VAT and Sales Tax

Whether the penalty should have been imposed on the entire turnover assessed to tax under section 21 or should have been imposed only on the basis of the turnover which had been concealed or incorrectly disclosed during the proceedings under section 21 of the U.P. Sales Tax Act? Whether the order passed by the Sales Tax Officer on 31st March, 1957, was one imposing a penalty both under clauses (b) and (c) of section 15-A or only under section 15-A(b)? Held that - Appeal dismissed. The penalty under section 15-A(1)(b) of the Act should have been imposed on the entire turnover assessed to tax under section 21, that is to say, on the turnover concealed from or incorrectly disclosed in the return submitted under section 7 and not in any statement submitted by the assessee under the proceeding under section 21 of the Act. It follows therefore that the High Court has correctly answered the first question against the assessee. The power to impose penalty is conferred upon the assessing authority, and he is not required to impose any fixed penalty. Only the maximum amount of penalty is indicated in the appropriate sections. The Judge (Revisions) has pointed out that the assessing authority has not imposed any penalty under section 15-A(1)(c). That order was made within his competence, and unless that order is set aside by appropriate proceedings under the Act, there can be no additional penalty imposed upon the assessee. It is also possible to take the view that the penalty imposed was a composite penalty both under clauses (b) and (c) of section 15-A(1). In our opinion, the second question does not require to be answered in the present reference because it has become academic.

Summary

Issues:
1. Assessment of additional tax on concealed turnover.
2. Imposition of penalties under section 15-A of the U.P. Sales Tax Act.

Analysis:
1. The appellant, a dealer in sugar, was assessed to sales tax for the year 1954-55 based on a return showing a net turnover of Rs. 665-9-3. Subsequently, it was discovered that the appellant had imported sugar and sold it without disclosing it in the return. The Sales Tax Officer issued a notice under section 21(1) of the Act to assess the tax on the concealed turnover. The appellant failed to comply with the notice, leading to the imposition of additional tax and penalties under section 15-A for failure to furnish accurate particulars of turnover. The High Court upheld the penalties imposed by the Sales Tax Officer, leading to the appeal to the Supreme Court.

2. The first issue addressed by the Court was whether the penalty under section 15-A should be imposed on the entire turnover assessed to tax under section 21 or only on the concealed turnover. The appellant argued that the penalty should be based on the turnover disclosed during the proceedings under section 21. However, the Court held that the penalty under section 15-A is applicable to the return filed under section 7, not to any statement submitted under section 21. Therefore, the penalty should be imposed on the turnover concealed or incorrectly disclosed in the return filed under section 7.

3. The second issue involved whether the penalties imposed by the Sales Tax Officer were correctly determined under clauses (b) and (c) of section 15-A(1). The High Court interpreted that separate penalties should apply under each clause, totaling a higher amount than imposed by the Sales Tax Officer. However, the Court clarified that the assessing authority has the discretion to impose penalties within the maximum limits specified in the sections. The Judge (Revisions) correctly noted that no penalty was imposed under section 15-A(1)(c), and the penalty imposed was within the assessing authority's competence. The Court concluded that the second question was academic and did not require further consideration.

4. Ultimately, the Court dismissed the appeal, upholding the penalties imposed under section 15-A for the appellant's failure to disclose accurate turnover details. The judgment clarified the application of penalties under the U.P. Sales Tax Act and affirmed the High Court's decision in favor of the respondent.