1967 (6) TMI 42 - HC - VAT and Sales Tax

Summary

Issues:
- Jurisdiction of Deputy Commissioner to levy penalty for the first time when assessing authority failed to make any observation on penalty in the original order of assessment.

Analysis:
The judgment in this case revolves around the question of whether a Deputy Commissioner has the jurisdiction to levy a penalty for the first time when the assessing authority did not make any observation on penalty in the original order of assessment. The Court considered the provisions of Section 12(3) of the Madras General Sales Tax Act, 1959, which empowers the assessing authority to levy a penalty. In a previous case, the Court had interpreted that the penalty under this section is dependent on a finding of incompleteness or incorrectness of the return submitted and is part of the proceedings resulting in the best judgment assessment. Therefore, the assessing authority should decide on the penalty while making the assessment itself.

The Court also analyzed Section 32(1) of the Act, which confers special powers on the Deputy Commissioner to examine orders passed by the appropriate authority under Section 12. The argument presented was that since the assessment order was silent on penalty, Section 32(1) would not be applicable. However, the Court disagreed with this argument, stating that the assessing authority had called upon the assessee to show cause why a penalty should not be levied in the provisional notice. The Court inferred that the assessing authority must have considered the question of penalty, even though it was not expressly mentioned in the final assessment order. The Court held that an order, though not expressly passed, can be impliedly passed based on the circumstances.

The Court cited a previous case where it was observed that silence about the imposition of penalty in an assessment order indicates that the assessing authority had applied its mind but did not find it necessary to levy a penalty. Therefore, the Court concluded that the Deputy Commissioner's power under Section 32(1) is broad and may include the power to revise the order to include a penalty where the assessing authority had failed to do so. Consequently, the Court dismissed the petition challenging the Deputy Commissioner's jurisdiction to levy penalty for the first time and held that there would be no costs in the circumstances.