1962 (7) TMI 34 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to penalty under section 13 of the Mysore Sales Tax Act, 1957 for delayed payment.

Analysis:
The petitioner challenged the penalty levied on him under section 13 of the Mysore Sales Tax Act, 1957, concerning assessments for the financial years 1958-59 and 1959-60. The assessment orders were made on 8th October, 1960, and demand notices were served on 7th November, 1960, requiring payment within 21 days. The petitioner paid the balance tax on 13th December, 1960. Subsequently, on 17th December, 1960, the respondent demanded a penalty for late payment. The key issue was whether the petitioner had incurred any penalty under section 13 before 28th November, 1960. Section 13 outlines the payment of tax and penalties for default. The court analyzed the provisions of the Act and the timeline of events to determine the petitioner's liability for the penalty.

The Government Pleader argued that the petitioner defaulted based on the requirements of a specific rule, even though no formal notice had been served. The rule required dealers to submit a receipt or payment along with their returns, failing which a notice would be issued for payment. The petitioner's counsel contended that the rule allowed payment either with the returns or in response to the notice, making default contingent on non-compliance with the notice's terms. The court examined the rule's language and intent to ascertain the correct interpretation regarding default and penalty imposition.

The court emphasized that no penalty could be imposed on an assessee until the final assessment was completed, and the assessee was only obligated to pay the admitted tax amount. It was determined that the notice in Form 6 was mandatory, and non-compliance with its terms would trigger default. The court agreed with the petitioner's argument that the penalty demanded, calculated up to November 1960, was unlawful. Consequently, the court quashed the order demanding the penalty and directed the respondent to bear the petitioner's costs. If the petitioner had already paid the penalty, a refund was to be issued. The petition was allowed in favor of the petitioner based on the court's interpretation of the relevant provisions and rules.

This judgment provides a detailed analysis of the application of section 13 of the Mysore Sales Tax Act, 1957, and the corresponding rules regarding the imposition of penalties for delayed tax payments. It clarifies the conditions under which a dealer can be considered in default and subject to penalties, emphasizing the importance of compliance with statutory notices and timelines in determining liability for penalties.