1972 (9) TMI 124 - HC - VAT and Sales Tax

Summary

Issues:
- Justification of the levy of extra penalty in addition to the minimum mandatory penalty.

Analysis:
1. The case involved a reference under section 44(1) of the Madhya Pradesh General Sales Tax Act, 1958, regarding the justification of an extra penalty of Rs. 5,000 imposed on the assessee in addition to the minimum mandatory penalty of Rs. 71,376. The petitioner-firm was assessed to sales tax for a specific period, and penalties were imposed by the sales tax authorities based on the purchases made and the subsequent export of goods.

2. The petitioner's counsel referred to a Supreme Court judgment regarding the imposition of penalties for failure to carry out statutory obligations. The judgment highlighted that penalties should not be imposed for technical breaches or when the offender acted in a bona fide belief. The court noted that the case under consideration was governed by section 8(2) of the Madhya Pradesh General Sales Tax Act, 1958, which differs from other penalty provisions, emphasizing the discretionary nature of penalty imposition.

3. Section 8(2) of the Act allows for the imposition of proper sales tax and penalties based on the circumstances of the case. The court clarified that the imposition of a penalty under this section is discretionary and should be based on judicial principles. In the present case, the Board of Revenue justified the penalty by considering the delayed payment of the proper sales tax, causing a loss of interest to the government. The court found the penalty imposition to be valid and not arbitrary.

4. The court rejected the introduction of new facts by the Board of Revenue and emphasized that the penalty was justified based on the considerations mentioned earlier. It concluded that the levy of the extra penalty of Rs. 5,000, in addition to the balance of proper sales tax, was justified in the circumstances of the case. The court clarified that the amount termed as a penalty was, in fact, the balance of proper sales tax, and the extra penalty was a standard penalty under section 8(2) of the Act.

5. The court answered the reference by affirming the justification of the penalty imposed and directed the case to be sent back to the Tribunal. It also ruled that there would be no order regarding the costs of the reference, thereby concluding the judgment on the matter of the penalty imposition under the Madhya Pradesh General Sales Tax Act, 1958.