1965 (10) TMI 54 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Proper entry under which electric fans should be taxed: Entry 52 or the residuary Entry 80 of Schedule B to the Bombay Sales Tax Act, 1953.
2. Validity of the imposition of penalty on the assessee under Section 16(4) of the Act.

Issue-Wise Detailed Analysis:

1. Proper Entry for Taxation of Electric Fans:
The primary issue was whether electric fans should be taxed under Entry 52 of Schedule B, which pertains to "domestic electrical appliances other than torches, torch cells, and filament lighting bulbs," or under the residuary Entry 80 of Schedule B.

- Revenue's Argument: The revenue argued that electric fans are "domestic electrical appliances" within the meaning of Entry 52, as they are used for domestic purposes.
- Assessee's Argument: The assessee contended that electric fans are not "domestic electrical appliances" because their primary use is not confined to homes but extends to offices and commercial establishments. Therefore, they should fall under the residuary Entry 80.
- Tribunal's Decision: The Tribunal held that electric fans fall within Entry 52, interpreting "domestic electrical appliances" to include electric fans based on the context and previous sales tax statutes.
- Court's Analysis: The Court examined the common parlance meaning of "domestic electrical appliances" and referred to authoritative sources like Encyclopaedia Britannica and Encyclopaedia Americana, which categorize electric fans as domestic electrical appliances. The Court also considered the legislative use of the words "other than" and "excluding" but found no significant legislative intent to differentiate between these terms. The Court concluded that electric fans are indeed domestic electrical appliances as they are generally used for household purposes, even if they are also used in other establishments.

Conclusion: The Court affirmed that electric fans fall under Entry 52 of Schedule B, as they are domestic electrical appliances in common parlance.

2. Validity of Imposition of Penalty under Section 16(4):
The second issue was whether the penalty imposed on the assessee under Section 16(4) for failing to pay the tax due before filing the return was valid.

- Facts: The assessee submitted a return for the quarter ending 30th June 1957, but paid only part of the tax before filing the return, paying the balance later. The Sales Tax Officer imposed a penalty under Section 16(4).
- Assessee's Argument: The assessee argued that liability to pay a penalty under Section 16(4) arises only if the tax is not paid within the time specified in a notice issued under Section 16(5), and since no such notice was issued, the penalty was invalid.
- Revenue's Argument: The revenue contended that the prescribed time for payment of tax due according to the return is before filing the return as per Section 16(2) and rules 4 and 10. The failure to pay the full amount before filing the return constituted a default, attracting penalty under Section 16(4).
- Court's Analysis: The Court analyzed the integrated scheme of payment and recovery under Section 16. It found that Section 16(2) establishes the liability to pay tax before filing the return but does not prescribe the time for payment. Section 16(5) prescribes the time by allowing the Collector to issue a notice specifying the date for payment. The Court held that liability to penalty under Section 16(4) arises only if the assessee fails to comply with the notice issued under Section 16(5). The Court rejected the revenue's argument that the prescribed time is the date of filing the return, as it would render Section 16(5) meaningless and inconsistent.

Conclusion: The Court concluded that the penalty under Section 16(4) was invalid as no notice under Section 16(5) was issued, and the assessee did not default in complying with such notice.

Summary:
The Court ruled that electric fans are taxable under Entry 52 of Schedule B as "domestic electrical appliances." It also held that the penalty imposed on the assessee under Section 16(4) was invalid due to the absence of a notice under Section 16(5). The Court answered Question No. 1 in the affirmative and Question No. 2 in the negative, with no order as to costs.