1972 (3) TMI 73 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction to ask for monthly returns and assessment for a broken period.
2. Jurisdiction to levy penalties for late submission of returns and late payment of taxes.

Detailed Analysis:

1. Jurisdiction to Ask for Monthly Returns and Assessment for a Broken Period:
The petitioners, Hurdatroy Jute Mills Private Limited and its directors, challenged the assessment order dated January 20, 1969, for the period April 1, 1968, to November 30, 1968. They contended that respondent No. 1, the assessing officer, had no jurisdiction to ask for monthly returns and to make an assessment for a broken period instead of the entire financial year.

The court examined the relevant provisions of the Central Sales Tax Act, 1956, and the Bihar Sales Tax Act, 1959. Section 6(1) of the Central Act specifies that tax liability is on sales effected in the course of inter-State trade or commerce "during any year." Section 9(3) of the Central Act refers to the assignment of tax proceeds for "any financial year." Rule 8(1) of the Central Sales Tax (Bihar) Rules, 1957, mandates quarterly and annual returns, not monthly returns. The court concluded that the provisions of the Bihar Act and Rules relating to the period of return are not applicable to the Central Sales Tax, except regarding the manner and time of filing returns.

The court held that respondent No. 1 had no jurisdiction to ask petitioner No. 1 to file monthly returns and to make an assessment for a broken period. The assessment should have been for the entire financial year from April 1, 1968, to March 31, 1969.

2. Jurisdiction to Levy Penalties for Late Submission of Returns and Late Payment of Taxes:
The petitioners also challenged the imposition of penalties for late submission of returns and late payment of taxes under sections 14(4) and 20(4) of the Bihar Act. The court examined whether these provisions were applicable to a registered dealer under the Central Act.

Section 9(2) of the Central Act states that authorities empowered to assess, collect, and enforce payment of any tax under the general sales tax law of the State shall do so on behalf of the Government of India, as if the tax or penalty payable under the Central Act is a tax or penalty payable under the State law. However, the court noted that penalties under the Central Act can only be imposed for acts and omissions specified in section 10 of that Act.

The court referred to various judgments from other High Courts, which held that the substantive provisions relating to penalty under the State Act are not applicable by virtue of section 9(2) of the Central Act. The court agreed with this view, stating that the provisions relating to the liability to pay penalty are substantive and not procedural. Therefore, in the absence of a clear provision in section 9(2) of the Central Act incorporating the substantive provisions of the State Acts relating to the imposition of penalties, the court held that respondent No. 1 was not authorized to impose penalties for late submission of returns and late payment of taxes.

Additionally, the court noted that since respondent No. 1 had no power to ask for monthly returns and to make an assessment for a broken period, there was no basis for imposing penalties for not filing monthly returns within time or for the late payment of tax based on monthly returns.

Conclusion:
The court accepted both contentions raised by the petitioners and held that the assessment order passed by respondent No. 1 was illegal and without jurisdiction. The order of assessment was quashed by a writ of certiorari. The court allowed the sales tax authorities to pass a fresh order of assessment for the entire period from April 1, 1968, to March 31, 1969, in accordance with the law. The application was allowed with no order as to costs.