1978 (12) TMI 168 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Justification of the Tribunal's decision regarding the penalty under section 36(2)(c) of the Bombay Sales Tax Act, 1959.

Detailed Analysis:

Issue 1: Justification of the Tribunal's Decision Regarding the Penalty Under Section 36(2)(c) of the Bombay Sales Tax Act, 1959

The primary question referred to the High Court was whether the Tribunal was justified in holding that the penalty was not legally leviable under section 36(2)(c) of the Bombay Sales Tax Act, 1959. The relevant facts are as follows: the assessee, a private limited company, was reassessed by the Sales Tax Officer, who imposed a penalty of Rs. 5,000 under section 36(2)(c). The assessee's appeal against this penalty was dismissed by the Assistant Commissioner of Sales Tax, but the Tribunal allowed the appeal, setting aside the penalty.

To address this issue, the court examined the provisions of section 36(2) as it stood during the relevant period, from 1st August 1964 to 31st March 1965. Initially, section 36(2) provided penalties for dealers who either wilfully failed to apply for registration, failed to comply with notices, or concealed or furnished inaccurate particulars of transactions. The term "deliberately" in clause (c) was later replaced by "knowingly" through an amendment effective from 1st July 1965, and an explanation was added to clarify that under certain conditions, a dealer would be deemed to have concealed or knowingly furnished inaccurate turnover.

The court scrutinized whether the term "assessing" in section 36(2) could be interpreted to include "reassessing" under section 35. The court concluded that the term "assessing" specifically referred to the process under section 33, and not to reassessment under section 35. The legislative intent was clear in distinguishing between assessment and reassessment, which were covered under different sections. The court found it inconceivable that the legislature would refer to section 33 if it intended to include reassessment under section 35 within the scope of section 36(2).

The submission by the department's counsel that the explanation to section 36(2) implied a broader meaning for "assessing" was rejected. The court noted that the explanation merely enunciated a rule of evidence and did not enlarge the scope of the main provision. The court also referred to various precedents, including the Supreme Court's decision in Hira Lal Rattan Lal v. Sales Tax Officer, which supported the view that an explanation cannot be used to extend the scope of the main provision unless it provides an artificial definition.

Further, the court considered the legislative amendments to section 36(2) and noted that the legislature later explicitly included reassessment in the opening part of the section through Maharashtra Act 40 of 1969. This amendment indicated that prior to this change, reassessment was not intended to be covered under section 36(2).

The court also highlighted that the government agent, during the Tribunal hearing, conceded that the amendment effective from 1st September 1969 did not apply to the proceedings in question, thus reinforcing the Tribunal's decision.

In conclusion, the court affirmed the Tribunal's decision, holding that the penalty under section 36(2)(c) was not legally leviable in the context of reassessment under section 35. The reference was answered in the affirmative, and the applicant was ordered to pay the costs of the reference to the respondent.