1976 (9) TMI 155 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of penalty provision under section 15-A(1)(b) of the U.P. Sales Tax Act regarding the quantum of penalty to be imposed.
2. Justification of reducing the penalty amount by the revising authority.

Detailed Analysis:

Issue 1:
The case involved a dispute regarding the determination of the quantum of penalty under clause (b) of section 15-A(1) of the U.P. Sales Tax Act. The assessing authority had initiated penalty proceedings against the assessee for concealing turnover. The revising authority reduced the penalty amount to Rs. 150, stating that only the turnover concealed in the account books should be considered for determining the penalty. However, the court held that the penalty under clause (b) is correlated to the tax payable on the difference between the assessed turnover and the turnover returned. The court relied on a decision of the Andhra Pradesh High Court and the Supreme Court to support this interpretation. It was determined that the penalty should be based on what would have been the tax that escaped assessment if the returned turnover had been accepted, with a maximum limit of one and a half times that amount.

Issue 2:
The revising authority had reduced the penalty amount to Rs. 150, which was challenged in the reference. The court found that the reduction of the penalty by the revising authority was based on an incorrect understanding of the maximum penalty permissible under clause (b) of section 15-A(1) of the Act. The court held that the revising authority was not justified in reducing the penalty amount and ruled in favor of the revenue, stating that the penalty should be determined based on the tax that would have escaped assessment if the returned turnover had been accepted, with a maximum limit of one and a half times that amount.

In conclusion, the court answered both questions in favor of the revenue and against the assessee, emphasizing that the penalty under section 15-A(1)(b) should be calculated based on the tax that would have escaped assessment if the returned turnover had been accepted, with a maximum limit of one and a half times that amount.