1978 (1) TMI 148 - HC - VAT and Sales Tax

Summary

Issues:
1. Levy of penalty under section 12-B(2) of the Karnataka Sales Tax Act, 1957.
2. Interpretation of section 12-B(2) regarding the payment of advance tax.
3. Applicability of penalty under section 12-B(2) for nonpayment of advance tax within the prescribed time.

Analysis:
1. The judgment dealt with the issue of the levy of penalty under section 12-B(2) of the Karnataka Sales Tax Act, 1957. The petitioner had defaulted in paying advance tax under section 12-B(1), leading to a penalty imposed by the Commercial Tax Officer. The petitioner's argument that no penalty should be levied for nonpayment along with the return was rejected. The court observed that under section 12-B(1), a dealer must pay the full amount of tax in advance based on the actual taxable turnover of the preceding month. The penalty under section 12-B(2) is attracted when the tax paid falls short of the tax payable by more than fifteen percent for the month. In this case, the petitioner had consistently failed to pay advance tax on time, justifying the penalty imposed.

2. The interpretation of section 12-B(2) was crucial in this judgment. The court clarified that the liability for penalty is incurred as soon as a default is committed in making payment within the prescribed time each month. The determination of the penalty at the end of the year is merely to ascertain the actual amount to be paid. Therefore, the timing of penalty determination does not exempt an assessee who has not paid the tax on time but settles it before the penalty assessment. The court emphasized that the requirement to determine the penalty at year-end does not absolve the dealer from the penalty liability incurred due to delayed payments throughout the year.

3. The court also addressed the issue of whether penalty under section 12-B(2) is applicable for nonpayment of advance tax within the prescribed time. The petitioner's argument that nonpayment should not attract a penalty was dismissed. The court highlighted that the failure to pay advance tax within the stipulated timeframe triggers the penalty provision under section 12-B(2). Despite the petitioner's explanation for delayed payments, the Commercial Tax Officer's decision to levy a penalty was upheld by the Deputy Commissioner and the Tribunal. The court concluded that there was no merit in the petitioner's contention, leading to the dismissal of the petition without any order as to costs.

In summary, the judgment reaffirmed the strict adherence to the provisions of the Karnataka Sales Tax Act, emphasizing the obligation of dealers to pay advance tax on time to avoid penalties under section 12-B(2).