1995 (11) TMI 339 - SC - VAT and Sales Tax

Whether any penalty has been levied in this case, and if so, on what ground? Held that - Appeal allowed. The two notices/orders impugned in the writ petition are ambiguous and do not make it clear whether the amount of Rs. 5,000 mentioned therein is a tax or a penalty. The impugned notices also speak of fine but do not say, under which provision are they levied. In these circumstances, the proper course is to quash the two orders/notices impugned in the writ petition with a direction to the assessing authority to pass appropriate orders afresh in accordance with law, after hearing the assessee, keeping in view the position of law explained in this judgment. The authority can also ascertain whether the appellant s case that he has deposited Rs. 10,000 in advance is correct and, if so, what is its effect in law-and its relevance in the matter of levy of penalty, fine or interest.

Summary

Issues:
- Validity of penalty imposed for failure to file returns under section 10 of the Uttar Pradesh Taxation and Land Revenue Laws Act, 1975.

Detailed Analysis:

The appeal before the Supreme Court arose from a writ petition filed by the appellant challenging the validity of notices/orders dated June 28, 1993, and July 14, 1993, issued by the assessing authority under the Uttar Pradesh Taxation and Land Revenue Laws Act, 1975. The appellant, who is the proprietor of a hotel, was called upon to deposit luxury tax on monthly lodging and boarding but failed to do so, resulting in the imposition of a penalty of Rs. 5,000. The High Court upheld the imposition of the penalty, stating that if the return has not been furnished, the authority may proceed under section 10 of the Act to impose a penalty. The High Court also noted that the appellant had deposited Rs. 10,000 in advance, suggesting that the appellant could approach the authority to settle the account accordingly.

In the appeal before the Supreme Court, the main contention raised by the appellant's counsel was that no penalty could be levied under section 10 of the Act for failure to file returns. The counsel argued that in case of non-filing of returns, the assessing authority should make a best judgment assessment as provided by the rules. The Supreme Court agreed with the counsel, highlighting that section 10 of the Act is the only provision for the levy of penalties, and penalties can only be imposed for specific grounds outlined in the Act. The Court noted that the notices/orders issued to the appellant were ambiguous, failing to clearly specify whether the amount of Rs. 5,000 was a tax or a penalty, and did not indicate the legal basis for the fine mentioned. Therefore, the Court quashed the impugned orders and directed the assessing authority to pass appropriate orders after hearing the appellant and considering the legal position explained in the judgment. The Court also instructed the authority to verify the appellant's claim of advance deposit and its legal implications in the matter of penalty, fine, or interest. The appellant was barred from raising objections on the grounds of limitation in the subsequent proceedings.

In conclusion, the Supreme Court allowed the appeal, modified the High Court's order, and provided directions for the reassessment of penalties in accordance with the law. No costs were awarded in the matter.