1973 (6) TMI 50 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to the right of the Commercial Tax Officer to collect penalty for belated payment of tax under the Mysore Sales Tax Act, 1957. Interpretation of section 13(2) of the Act regarding the liability to pay penalty for default in tax payment. Examination of the validity of rule 21(4b) in demanding penalty along with tax payment. Analysis of the decision in Aswathiah & Brothers v. Commercial Tax Officer regarding default in tax payment and penalty imposition. Determination of whether the petitioner became a defaulter under the Act and incurred penalty.

The High Court of Mysore heard four writ petitions challenging the Commercial Tax Officer's right to collect a penalty for late tax payment under the Mysore Sales Tax Act, 1957. The petitioner disputed being a defaulter to attract penalties under section 13(2) of the Act. The petitioner filed quarterly returns, paying tax after the due dates for some quarters. The Commercial Tax Officer demanded penalties totaling Rs. 50,132.05 for the quarters. The petitioner sought waiver, but the State Government declined. The Court had to decide if the petitioner defaulted under section 13(2) of the Act, which stipulates penalties for payment default. The Act requires tax payment as prescribed, and rule 21(4b) mandates penalty payment if tax is not paid with the return. The petitioner argued the rule demanding penalty along with tax was ultra vires. The Court referred to a previous judgment stating an assessee becomes a defaulter only if tax is not paid within the time specified in the demand notice. The Court found the petitioner did not default as tax was paid within the notice period. It held that the rule demanding penalty along with tax was beyond the Act's scope. The Court issued a writ of mandamus restraining the enforcement of the penalty claimed by the Commercial Tax Officer.

In the judgment, the Court analyzed the provisions of the Mysore Sales Tax Act, 1957, particularly section 13(2) regarding penalties for default in tax payment. It scrutinized the validity of rule 21(4b) requiring penalty payment along with tax if not paid with the return. The Court referenced a prior case to establish the criteria for an assessee to be considered a defaulter under the Act. It concluded that the petitioner did not default as tax payment was made within the notice period, as required by the Act. The Court deemed the rule demanding penalty along with tax as ultra vires of the Act. Consequently, the Court issued a writ of mandamus directing the Commercial Tax Officer to refrain from enforcing the penalty claimed.

The judgment delved into the interpretation of the Mysore Sales Tax Act, 1957, focusing on section 13(2) governing penalties for payment default. It examined the implications of rule 21(4b) necessitating penalty payment if tax was not paid concurrently with the return. By referencing a previous case, the Court elucidated the conditions for an assessee to be categorized as a defaulter under the Act. The Court determined that the petitioner did not default, as tax payment was made within the stipulated notice period. It adjudged the rule demanding penalty along with tax as exceeding the Act's authority. Consequently, the Court issued a writ of mandamus instructing the Commercial Tax Officer to desist from enforcing the penalty claimed.

The judgment revolved around the assessment of the Mysore Sales Tax Act, 1957, especially section 13(2) concerning penalties for defaulting in tax payment. It scrutinized the legality of rule 21(4b) mandating penalty payment if tax was not remitted along with the return. The Court referenced a prior case to establish the criteria for an assessee to be deemed a defaulter under the Act. It concluded that the petitioner did not default, as tax payment was executed within the notice period prescribed by the Act. The Court deemed the rule demanding penalty along with tax as ultra vires of the Act, leading to the issuance of a writ of mandamus restraining the enforcement of the penalty by the Commercial Tax Officer.