1961 (10) TMI 70 - HC - VAT and Sales Tax

Summary

Issues Involved
1. Legality of the assessment order.
2. Legality of the imposition of penalty.

Detailed Analysis

1. Legality of the Assessment Order
The petitioner challenged the assessment order on the ground that the notices served were not in compliance with the law, specifically under section 11(4) of the C.P. and Berar Sales Tax Act, 1947, read with rule 32 of the Sales Tax Rules. The petitioner argued that the notices did not provide the required 30-day period for appearance, thus violating the statutory requirement of giving a "reasonable opportunity of being heard."

The court examined the facts and determined that the first notice issued on 31st October 1955, provided approximately 11 days for appearance, and the second notice issued on 17th March 1956, provided 27 days. The court noted that the term "ordinarily not less than 30 days" in rule 32 indicates flexibility, and the petitioner had prior knowledge of the assessment proceedings. Therefore, the court concluded that the 27 days provided by the second notice were sufficient compliance with the statutory requirement, and the petitioner had a reasonable opportunity to be heard. The court upheld the assessment order, finding no error or perversity in the authorities' actions.

2. Legality of the Imposition of Penalty
The petitioner also challenged the penalty imposed under section 10(3) of the Sales Tax Act, arguing that the approval for the penalty was given by the Assistant Commissioner instead of the Commissioner, as required by the proviso to section 16 of the Sales Tax Act.

The court analyzed section 10(3) and section 16, noting that section 10(3) allows the Commissioner to impose a penalty if a dealer fails to comply with notice requirements or fails to furnish returns without sufficient cause. Section 16 permits the Commissioner to delegate his powers, except those under section 24(2), to any person appointed to assist him, but the proviso requires the Commissioner's prior approval for imposing penalties.

The court referred to rule 67, which allows delegation of the power to impose penalties to officers below the rank of the Commissioner, including the Assistant Commissioner, with the previous approval of the Commissioner. The court identified an apparent conflict between section 16, which requires the Commissioner's approval, and rule 67, which permits the Assistant Commissioner's approval.

The court resolved this conflict by interpreting that rule 67 applies specifically to cases where a dealer fails to furnish returns, while section 16 applies broadly to all cases under section 10(3). Therefore, dual approval from both the Assistant Commissioner and the Commissioner might be necessary in some instances. The court emphasized that the statutory language was clear and intended to safeguard the assessee against penal provisions.

In conclusion, the court held that the penalty imposed in the instant case was invalid due to the lack of prior approval from the Commissioner, as mandated by section 16. Consequently, the penalty was set aside.

Final Order
The court upheld the assessment order but set aside the penalty. There was no order as to costs, given the equal measure of success and failure for both parties. Ordered accordingly.