1978 (11) TMI 130 - HC - VAT and Sales Tax

Summary

Issues:
- Imposition of penalty on the petitioner for default of payment of sales tax arrears.
- Validity of exhibit P2 order allowing instalment payment.
- Challenge to exhibit P8 order being time-barred.
- Interpretation of provisions of the Sales Tax Act regarding penalty and interest.

Analysis:

1. Imposition of Penalty: The petitioner, an assessee to sales tax, had arrears of sales tax for the years 1970-71 to 1973-74. Despite paying instalments as permitted by exhibit P2 order, penalties were imposed on the petitioner through exhibits P4 to P7 orders by the Sales Tax Officer. The challenge was made to quash these orders. The court observed that the penalty imposed by exhibit P8 order was time-barred, but the revisions against exhibits P5 to P7 were dismissed on 26th July 1975, communicated on 18th August 1975, and not time-barred.

2. Validity of Exhibit P2 Order: The petitioner argued that due to exhibit P2 order compliance, penalties were not imposable. The Government Pleader contended that exhibit P2 order was not statutorily recognized, citing sections 23(3) and 24 of the Sales Tax Act. The court agreed with the Government Pleader that there was no provision enabling the Government to pass an instalment payment order like exhibit P2. However, the court acknowledged the petitioner's compliance with the order for 22 months.

3. Challenge to Exhibit P8 Order: The court found the challenge to exhibit P8 order time-barred, as well as the revisions against exhibits P5 to P7. The court highlighted that the liability to pay penal interest is automatic under the Sales Tax Act, even without a formal order imposing a penalty. The court allowed the appeal, quashing the orders dated 26th July 1975 on exhibits P5 to P7 revisions, while affirming the findings regarding exhibits P4 and P8 orders.

4. Interpretation of Provisions: The court emphasized that there is no provision in the law to pass orders imposing penalties like exhibits P5 to P7, as the accrual of penal interest is automatic upon defaults. The court allowed the appeal, modifying the judgment of the learned Judge, and dismissed the original petition regarding exhibits P4 and P8 orders. The court noted that the appeal seemed unnecessary, as the revisions had been disposed of before the judgment was delivered.

This detailed analysis covers the issues of penalty imposition, validity of exhibit P2 order, challenge to exhibit P8 order, and interpretation of the Sales Tax Act provisions regarding penalty and interest, as discussed in the judgment delivered by the Kerala High Court.