1967 (3) TMI 96 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether penalty under section 12(3) of the Madras General Sales Tax Act, 1959, can be levied on the legal representative of the deceased.

Analysis:
The case dealt with the issue of whether a penalty under section 12(3) of the Madras General Sales Tax Act, 1959, could be imposed on the legal representative of a deceased individual. The deceased, who was the proprietor of a rice mill, had failed to report a large turnover before his death. After his demise, an assessment was conducted against his son as the legal representative, resulting in the imposition of a penalty of Rs. 1,130, later reduced to Rs. 610 on appeal. The Tribunal contended that the Act did not authorize the penalty levy under these circumstances, citing the quasi-criminal nature of penalties and comparing it to decisions made under the Income-tax Act, 1922.

The High Court disagreed with the Tribunal's view, emphasizing that if the statute permits the penalty levy, there should be no objection unless a constitutional issue arises. The Court highlighted the deeming provision in section 15 of the Act, which considers the legal representative as a dealer for the Act's purposes. It clarified that the legal representative should be treated as a dealer for all Act-related matters, including penalty imposition under section 12(3). Section 15 also outlined the liability of the legal representative for taxes and fees owed by the deceased, allowing for the recovery of penalties from the deceased's assets in the legal representative's possession.

The Court further supported its interpretation by comparing it to section 159(3) of the Income-tax Act, 1961, which explicitly deems the legal representative as an assessee for the Act's purposes. This comprehensive deeming provision solidified the legal representative's status as the dealer for all Act-related aspects. Consequently, the High Court set aside the Tribunal's order and reinstated the decision of the Appellate Assistant Commissioner, allowing the petition with costs.

In conclusion, the judgment clarified that penalties under section 12(3) of the Madras General Sales Tax Act, 1959, could indeed be levied on the legal representative of a deceased individual, as per the deeming provision in section 15 and the Act's overall scheme.