1977 (12) TMI 119 - HC - VAT and Sales Tax

Summary

Issues:
- Interpretation of section 36(3) of the Bombay Sales Tax Act, 1959 in relation to the Central Sales Tax Act, 1956 for levying penalties.
- Validity of penalty imposed under the Central Sales Tax Act, 1956 for late payment of tax.

Analysis:
The judgment pertains to a reference under section 9(2) of the Central Sales Tax Act, 1956, read with section 61(1) of the Bombay Sales Tax Act, 1959. The main issue raised was whether the penalty imposed under the Central Sales Tax Act for late payment of tax could be justified by importing the provisions of section 36(3) of the Bombay Sales Tax Act. The respondents were penalized for delay in payment of tax under the Central Act, which they contested through appeals. The Tribunal set aside the penalty based on its earlier decision, prompting the Commissioner of Sales Tax to seek a reference to the High Court.

A significant aspect of the judgment involved a Supreme Court decision in a similar case, where it was held that penalties under State Sales Tax Acts could not be imposed on dealers under the Central Sales Tax Act. However, the legal landscape changed with the enactment of the Central Sales Tax (Amendment) Act, 1976. The amendment introduced a new sub-section (2A) in section 9 of the Central Act, allowing the application of State laws' provisions on penalties to the assessment and collection of taxes under the Central Act. The amendment was retrospective, validating penalties imposed before its enactment that were previously deemed invalid by the Supreme Court.

In light of the amended provisions, the High Court concluded that the penalty imposed on the respondents for late payment of tax under the Central Act was valid. The Court answered the reference question in the negative, indicating that the penalty imposition was lawful under the amended legislation. The judgment highlights the interplay between State and Central tax laws regarding penalty provisions and the impact of legislative amendments on the validity of penalties imposed under the Central Sales Tax Act.