1974 (8) TMI 91 - HC - VAT and Sales Tax

Summary

Issues:
Assessment of penalty under section 12-A of the Karnataka Sales Tax Act, 1957 based on concealment of turnover. Interpretation of the notice issued under section 12(4) of the Act and its applicability as a valid notice under section 12-A(1-A) of the Act. Validity of the penalty order passed after a lapse of more than two years from the date of the original assessment order. Construal of the notice for imposition of penalty and the timing of penalty imposition in relation to the assessment order.

Analysis:
The case involved a revision petition challenging the order of the Sales Tax Appellate Tribunal regarding the imposition of a penalty under section 12-A of the Karnataka Sales Tax Act, 1957. The matter pertained to the assessment year 1968-69, where the assessee was assessed for concealing a turnover of Rs. 1,28,640.00. The Commercial Tax Officer levied a penalty of Rs. 2,894.40 under section 12-A of the Act. The assessee disputed the penalty but did not appeal the reassessment order. The Deputy Commissioner of Commercial Taxes allowed the appeal, citing the delayed penalty order and the timing of penalty imposition as grounds for relief.

The State appealed to the Sales Tax Appellate Tribunal, which held that the notice issued under section 12(4) should be treated as one under section 12-A(1-A) of the Act. The revision petition contended that the notice was not valid under section 12-A(1-A) and did not afford a reasonable opportunity to the assessee to show cause against the penalty imposition. The High Court analyzed the notice dated 18th January, 1971, and concluded that it did not meet the requirements of clause (1-A) of section 12-A, as it did not state the satisfaction of the assessing authority regarding the wilful non-disclosure of turnover.

The High Court emphasized that the penalty order should be made simultaneously with the assessment under section 12-A, similar to the requirement for section 12(4) penalties. The court rejected the argument that the notice under section 12(4) should be construed as one under clause (1-A) of section 12-A, emphasizing the strict construction of penalty imposition proceedings. The court ruled in favor of the assessee, allowing the revision petition, reversing the Tribunal's order, and reinstating the Deputy Commissioner's decision. The judgment highlighted that the benefit of doubt should favor the assessee in penalty imposition cases, and the State cannot compel the notice to be interpreted as one under clause (1-A) of section 12-A.