1979 (4) TMI 148 - HC - VAT and Sales Tax

Summary

Issues:
1. Imposition of penalty under section 15-A(1)(a) of the U.P. Sales Tax Act.
2. Retroactive amendment of section 9 of the Central Sales Tax Act.
3. Interpretation of the term "reasonable cause" in the context of penalty imposition.
4. Validity of penalty order under the Validating Act of 1976.
5. Jurisdiction of revising authority to set aside penalty order under section 9(2).

Detailed Analysis:
1. The Sales Tax Officer imposed a penalty under section 15-A(1)(a) of the U.P. Sales Tax Act on the assessee for failing to deposit the tax along with the return. The revising authority found that the assessee had a reasonable cause for not making the deposit, as they believed an adjustment was due to them. The authority held that the term "reasonable cause" in section 15-A(1)(a) applies to the entire provision, not just the opening part, and the penalty cannot be imposed if a reasonable cause is shown for the failure to deposit the tax.

2. The Parliament retroactively amended section 9 of the Central Sales Tax Act by introducing sub-section (2A), which allowed for the penalty to be justified by reference to the State Act as well. This retrospective amendment enabled the penalty to be imposed under the State Act even when there was no corresponding provision in the Central Act at the time of penalty imposition.

3. The interpretation of the term "reasonable cause" in the context of penalty imposition was crucial. The revising authority's finding that there was a reasonable cause for the assessee's failure to deposit the tax was upheld. It was emphasized that determining the existence of a reasonable cause is a factual inquiry, and in this case, the revising authority's decision was deemed not arbitrary.

4. The Validating Act of 1976 was invoked to validate penalty orders passed earlier under the view that the Central Act authorized penalty imposition under the State law. However, it was clarified that this validation did not extend to orders that were unjustified even under the penalty provisions of the State law. The revising authority's decision to set aside the penalty order due to the reasonable cause for non-depositing tax was deemed valid and not cured by the amending Act.

5. The jurisdiction of the revising authority to set aside the penalty order was challenged based on section 9(2) of the Act. It was clarified that this section did not restrict the appellate or revisional powers regarding penalty orders. The revising authority had the right to examine the validity of the penalty order and set it aside if found unwarranted under the penalty provisions of the State law, which was precisely what occurred in this case.

In conclusion, the revision was dismissed, and the penalty order was set aside due to the existence of a reasonable cause for the failure to deposit the tax, as determined by the revising authority.