1978 (6) TMI 159 - HC - VAT and Sales Tax

Summary

Issues:
1. Levy of penalty on a registered dealer under Tamil Nadu General Sales Tax Act, 1959 for contravention of provisions.
2. Determination of status as a dealer or commission agent.
3. Violation of Section 22(1) of the Act by collecting tax at the point of sale instead of purchase.
4. Appeal against the levy of penalty and quantum of penalty imposed.

Analysis:
The judgment pertains to the imposition of a penalty on a registered dealer under the Tamil Nadu General Sales Tax Act, 1959. The appellant, a dealer, sold jaggery and collected tax at the point of sale, contrary to the Act which mandated tax collection at the point of purchase. The assessing officer found the appellant in contravention of Section 22(1) and imposed a penalty. The Appellate Assistant Commissioner initially canceled the penalty, but the Board of Revenue, in a suo motu revision, reinstated the penalty, leading to the current appeal challenging the Board's decision.

The Court analyzed the appellant's status, noting that merely charging the same price as paid at the time of purchase in bills issued to purchasers did not establish the appellant as a commission agent. The burden of proof lay with the appellant to demonstrate his status, which he failed to do convincingly. The Court upheld the findings regarding the appellant's status as a dealer rather than a commission agent.

Regarding the violation of Section 22(1), the Court emphasized that the appellant, being a registered dealer, should have been aware of the tax collection provisions. Despite not explicitly labeling the collected amount as sales tax in the bills, the appellant charged 5% tax, mirroring the purchase tax rate, at the point of sale. The Court rejected the argument that the absence of the term "sales tax" on the bill absolved the appellant of wrongdoing, as the nature of the tax collection was evident.

The appellant's failure to appeal against the assessment order, only challenging the penalty, indicated a simplistic treatment of the transactions as sales, leading to the erroneous collection of tax at the point of sale. The Court affirmed that such conduct fell within the scope of Section 22(1) violation, warranting the imposition of a penalty.

Lastly, the Court addressed the quantum of penalty, clarifying that the Board of Revenue's decision to impose a penalty not exceeding one and a half times the amount collected was reasonable. It highlighted the State's authority to levy penalties for violations of taxing statutes, affirming the Board's decision to sustain the penalty imposed by the assessing authority. Consequently, the appeal against the penalty imposition was dismissed, upholding the Board of Revenue's order.