1970 (3) TMI 107 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to constitutionality of section 18-A of the Mysore Sales Tax Act, 1957. Allegations of contravention of section 18(1) of the Act. Interpretation of section 18-A and section 18(1) in the context of the case.

Analysis:
The writ petition challenged a notice issued by the Commercial Tax Officer proposing a penalty under section 18-A of the Mysore Sales Tax Act, 1957. The petitioner, a dealer acting as a commission agent for agricultural producers, objected to the levy of sales tax on chillies sales. The assessing authority rejected the objection initially, but it was later accepted on appeal to the Deputy Commissioner of Commercial Taxes. The impugned notice alleged that the petitioner collected tax on sales of chillies, which were not taxable, leading to the penalty proposal.

The petitioner raised various grounds against the notice, including the constitutionality of section 18-A, alleging violation of constitutional articles and legislative competence. The court, however, focused on whether there was a contravention of section 18(1) of the Act, a prerequisite for applying section 18-A. Section 18-A allows penalties for contraventions of section 18(1) or (2). The court analyzed the provisions and previous case law to determine the scope of contravention under section 18(1).

The court highlighted that a dealer must contravene section 18(1) or (2) for section 18-A penalties to apply. Referring to precedents, including a Supreme Court case, it emphasized that if a dealer is not liable to pay tax on a transaction, any collection made does not contravene section 18. In this case, the appellate authority had ruled that the sales of chillies were not taxable, and the collections made by the petitioner fell outside the scope of section 18. Therefore, there was no contravention of section 18, and the Commercial Tax Officer had no jurisdiction to impose penalties under section 18-A.

In conclusion, the court allowed the writ petition, quashing the impugned notice and ruling in favor of the petitioner. The judgment clarified the interpretation of section 18-A and section 18(1) in the context of the case, emphasizing that penalties could only be imposed if there was a contravention of the specified provisions.