1966 (7) TMI 63 - HC - VAT and Sales Tax

Summary

Issues:
Trader's convictions for non-payment of taxes under the General Sales Tax Act for the years 1960-61 and 1961-62; Legal validity of convictions under the new Act; Timing of tax liability and evasion; Multiple convictions for the same tax under different clauses of the Act.

Analysis:

1. The trader was assessed for taxes based on seized account books for the years 1960-61 and 1961-62. Despite demand notices, he did not pay the taxes, leading to prosecutions and convictions under the new Act. The trader argued that since the taxes arose under the old Act, prosecutions should be under that Act only. However, the court held that the liability to pay tax arose when taxable transactions occurred, and the trader committed an offence by not paying after assessment and demand under the new Act.

2. The trader contended that evasion of tax can only occur after it becomes payable, not before. The court disagreed, stating that liability for taxes arose before the sale of properties to evade payment. The court invoked the Transfer of Property Act, suggesting that a transfer to defeat revenue, coupled with non-payment of tax, constitutes fraudulent evasion punishable under the new Act.

3. The trader argued against multiple convictions for the same tax under different clauses of the Act. The court explained that clauses (1)(f) and (2)(c) cover different aspects of tax evasion. Since wilful non-payment is implicit in fraudulent evasion, a conviction under (2)(c) encompasses (1)(f), making separate convictions redundant. The court discharged the conviction under (1)(f) and affirmed the conviction under (2)(c) for both cases.

4. The court altered the sentences, considering the historical punishment for tax evasion and the new Act's provisions. The trader was sentenced to fines and imprisonment in default. The court imposed fines of Rs. 500 and Rs. 2,000, with corresponding imprisonment terms. The trader was given one month to pay the fines. The judgment discharged the conviction under (1)(f) and affirmed the conviction under (2)(c) of the Kerala General Sales Tax Act, 1963, with revised sentences.

In conclusion, the court clarified the legal validity of the trader's convictions under the new Act, addressed the timing of tax liability and evasion, and resolved the issue of multiple convictions for the same tax under different clauses of the Act, ultimately altering the sentences to align with the provisions of the new Act.