1966 (3) TMI 69 - HC - VAT and Sales Tax

Summary

Issues:
- Appeals by the State against acquittal under section 14(1)(a) of the U.P. Sales Tax Act.
- Challenge of assessments by respondents.
- Interpretation of "reasonable cause" for failure to pay assessed tax.
- Imposition of penalty on respondents.

Analysis:
The judgment by the High Court of Allahabad pertains to four appeals filed by the State against the acquittal of the respondents under section 14(1)(a) of the U.P. Sales Tax Act. The appeals were directed against the orders of the SubDivisional Magistrate, City Aligarh, acquitting the respondents. The State contended that the respondents did not challenge the assessments in accordance with the procedure laid down in the Act, therefore, they could not argue that the goods they dealt with were not liable to sales tax. The inability of the respondents to pay the tax due to subsequent financial difficulties was also questioned as a "reasonable cause" for failure to deposit the assessed tax within the specified time. The court found merit in the State's contentions, emphasizing that the assessments should have been challenged as per the prescribed procedure. The court held that the term "reasonable cause" in section 14(1)(a) did not encompass the inability to pay the assessed tax due to misunderstandings of the law or financial constraints. The liability to pay tax arose under the Act, and failure to collect it from purchasers did not absolve the respondents from their payment obligation within the stipulated period.

Furthermore, the judgment addressed the issue of penalty imposition on the respondents. Considering all the facts and circumstances, the court determined that a token penalty of Rs. 50 each in all appeals would be sufficient to serve the interests of justice. Consequently, the appeals were allowed, the orders of acquittal were set aside, and the respondents were sentenced to a penalty of Rs. 50 each in all cases. The judgment provides a comprehensive analysis of the legal principles surrounding the challenge of assessments, the interpretation of "reasonable cause" for non-payment of taxes, and the appropriate imposition of penalties in such cases.