1974 (6) TMI 53 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Applicability of the test of the tax assessment exceeding more than 20% of the tax already paid under sub-section (3A) of section 36 of the Bombay Sales Tax Act, 1959.
2. Consideration of tax payments made after filing returns but before final assessment in determining the applicability of the penalty under sub-section (3A) of section 36.

Detailed Analysis:

1. Applicability of the Test of Tax Assessment Exceeding More Than 20% of the Tax Already Paid:
The core issue is whether the tax assessment exceeding more than 20% of the tax already paid, as provided by sub-section (3A) of section 36 of the Bombay Sales Tax Act, 1959, should consider the amount of tax paid by the assessee after filing the return but before the final tax assessment. The respondent-assessee, a partnership firm, paid taxes along with its quarterly returns, amounting to Rs. 4,295.94. Upon final assessment, the Sales Tax Officer determined the total tax payable as Rs. 5,924.84, resulting in a shortfall of Rs. 1,628.88, which exceeded 20% of the initially paid amount. Consequently, a penalty of Rs. 415.47 was levied under sub-section (3A) of section 36.

2. Consideration of Tax Payments Made After Filing Returns but Before Final Assessment:
The Sales Tax Officer did not consider an additional payment of Rs. 1,500 made by the assessee on 15th December 1970, before the final assessment on 31st December 1970. The Tribunal, however, concluded that since the assessee had paid the tax amount of Rs. 1,500 prior to the assessment, the requirements of sub-section (3A) of section 36 were fully complied with. The Tribunal's interpretation was that the term "sum already paid" in sub-section (3A) includes all payments made before the final assessment, not just those made along with the returns. The Tribunal's decision was challenged by the State, leading to this reference.

Judgment Analysis:
The court's interpretation hinged on the language of sub-section (3A) of section 36, which does not limit the "sum already paid" to amounts paid along with the returns. The court emphasized that the legislature used the term "sum already paid," which includes any payments made before the assessment. The court rejected the revenue's argument that only payments made with the returns should be considered, stating that such an interpretation would be a misinterpretation and amount to judicial legislation.

The court also noted that similar provisions in other tax laws, like the Indian Income-tax Act, 1961, explicitly reference the income returned by the assessee, indicating that if the legislature intended to limit the consideration to payments made with returns, it would have explicitly stated so.

Conclusion:
The court affirmed the Tribunal's decision, stating that the additional payment of Rs. 1,500 made by the assessee before the final assessment should be considered when applying the 20% test under sub-section (3A) of section 36. The court answered the reference in the affirmative, ruling in favor of the respondent-assessee and ordered the petitioner-State to bear the costs of the respondent-assessee in this reference.

Reference Answered in the Affirmative.