1961 (9) TMI 43 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of exemption fee determination.
2. Requirement of penalty payment.
3. Legal implications of the compounding fee.

Validity of exemption fee determination:
The petitioner, a food-grains dealer, challenged the estimate of his turnover and the exemption fee imposed by the Sales Tax Officer under the U.P. Sales Tax Act. Despite the petitioner's dissatisfaction and subsequent revision application, the Judge (Revisions) upheld the decision. The Sales Tax Officer required the petitioner to pay the balance of the exemption fee within a specified period. Failure to comply led to the determination of sales tax payable by the petitioner. The High Court held that the petitioner forfeited the concession to pay exemption fee by not adhering to the prescribed rules and orders. The Court emphasized that the exemption fee was a concession, not a vested right, and non-compliance resulted in the petitioner being liable for sales tax.

Requirement of penalty payment:
The petitioner deposited a portion of the required amount but failed to pay the penalty of Rs. 37-8-0. The Sales Tax Officer provided an option to avoid sales tax payment if the petitioner paid the balance and penalty by a specified date. The Court rejected the petitioner's argument that the penalty required prior sanction and notice under section 15-A of the U.P. Sales Tax Act. It clarified that the penalty was a compounding fee, not a penalty in the traditional sense. The Court deemed the further concession by the Government as a means to rectify defaulting payments, emphasizing the petitioner's responsibility to comply with conditions to benefit from concessions.

Legal implications of the compounding fee:
The Court distinguished the compounding fee from a penalty, stating that it allowed defaulting dealers a chance to rectify non-compliance. The Court noted that the compounding fee did not fall under the purview of section 15-A of the Act, as it was a condition for availing concessions. The Court upheld the Government's authority to grant concessions with conditions, including the payment of the compounding fee. As the petitioner failed to fulfill the payment requirements, the Court deemed the recovery proceedings for sales tax as inevitable. Consequently, the Court dismissed the writ petition, affirming the petitioner's liability for the sales tax amount.