1961 (9) TMI 57 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge to penalty order under section 15-A of the U.P. Sales Tax Act.
2. Interpretation of provisions related to filing returns under section 7 and rules 39, 40, and 41.
3. Effect of Full Bench decision on the applicability of rules prior to 1954 amendment.
4. Consideration of "without reasonable cause" for imposing penalty under section 15-A.
5. Examination of the Sales Tax Officer's error in imposing penalty without a prescribed filing period.
6. Availability of alternative remedy and the court's decision under Article 226 of the Constitution.

Detailed Analysis:
1. The writ petition challenged a penalty order dated 25th July, 1959, under section 15-A of the U.P. Sales Tax Act, which allows penalties for failure to furnish returns or concealing turnover details. The penalty was imposed based on the failure to file a return under sub-section (a) of section 15-A, with the Sales Tax Officer erroneously concluding concealment under sub-section (b) as well.

2. The petitioner argued that prior to the 1954 amendment, section 7 provided an option for dealers to choose the basis of assessment year for filing returns. Rules 39, 40, and 41 were framed to give effect to this option, indicating that until new rules were enforced in 1956, there was no prescribed period for filing returns under the amended section 7.

3. Referring to a Full Bench decision, it was highlighted that the rules in place before 1954 became irrelevant post-amendment, suggesting that until new rules were framed in 1956, there was ambiguity regarding the filing period. This ambiguity was crucial in determining whether there was a failure to file a return without reasonable cause under section 15-A.

4. The judgment emphasized that a penalty under section 15-A can only be imposed if the failure to file a return is "without reasonable cause." Given the uncertainty in the law and the absence of a specified filing period, the failure to file a return was considered justified and not without reasonable cause.

5. The Sales Tax Officer's error in disregarding the legal uncertainties and penalizing the petitioner for a failure to file a return was highlighted. The court noted that the penalty provision does not solely rely on the officer's subjective discretion but requires a valid basis, which was lacking in this case due to the unclear legal framework.

6. Despite the availability of an alternative remedy, the court intervened under Article 226 of the Constitution due to the glaring error by the Sales Tax Officer in imposing the penalty. The judgment allowed the writ petition, quashed the penalty order, and awarded costs to the petitioner, emphasizing the unjustified nature of the penalty imposition.