1974 (1) TMI 93 - HC - VAT and Sales Tax

Issues Involved:
1. Interpretation of the term "tax due" in sub-section (3) of section 11 of the Orissa Sales Tax Act, 1947.
2. Imposition of penalty under section 11(3) before the completion of assessment under section 12.
3. Justification of the maximum penalty leviable under section 11(3) of the Act.

Issue-wise Detailed Analysis:

1. Interpretation of the Term "Tax Due":
The first issue concerns whether the expression "tax due" in sub-section (3) of section 11 refers to the admitted tax payable by the dealer as per his return. The Tribunal had held that the "tax due" is not the same as the admitted tax payable by the dealer. It distinguished between "tax due" and "tax payable," stating that "tax due" becomes a debt only after it is quantified by assessment and a demand notice is issued. However, the court found this interpretation incorrect. The court emphasized that the statute requires the admitted tax to be paid at the time the return is due, and this amount is considered "tax due" at that stage. The court concluded that the term "tax due" in section 11(3) does indeed refer to the admitted tax payable by the dealer on the basis of his return.

2. Imposition of Penalty Before Completion of Assessment:
The second issue addressed whether a penalty under section 11(3) can be imposed before the completion of the assessment under section 12. The Tribunal had opined that such a penalty could not be imposed until the assessment was completed. The court disagreed with this view, stating that the statutory provisions, including form X, contemplate raising the demand of penalty without completing the assessment. The penalty provision is not dependent on the completion of the assessment. The court highlighted that the penalty is exigible if the return is not filed within a fortnight of the due date, and it is calculated based on the admitted tax, which is due at the time of making the return.

3. Justification of the Maximum Penalty Leviable:
The third issue examined whether the maximum penalty leviable under section 11(3) is Rs. 5 per day of default. The Tribunal had held that the maximum penalty was Rs. 5 per day, based on its interpretation that no tax was due, only tax payable. The court found no mandate in section 11(3) for this distinction. The court clarified that section 11(3) provides two alternative rates of penalty: one-tenth per centum of the tax due or Rs. 5, whichever is higher, for every day of default. The higher of the two alternatives must be imposed. The court concluded that the Tribunal was not justified in holding that the maximum penalty was Rs. 5 per day of default.

Conclusion:
The court answered the referred questions as follows:
1. The expression "tax due" in sub-section (3) of section 11 refers to the admitted tax payable by the dealer on the basis of his return.
2. Penalty at the rate of one-tenth per centum of the tax due can be imposed before the completion of assessment under section 12.
3. The maximum penalty exigible under the Act is not limited to Rs. 5 per day of default; it should be the higher of one-tenth per centum of the tax due or Rs. 5 per day.

The revenue was awarded costs of the proceeding, assessed at Rs. 150.

← Previous Next →