1980 (2) TMI 245 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to validity of Board of Revenue's order and show cause notice for penalty under Rajasthan Sales Tax Act, 1954. Interpretation of provisions regarding purchase tax and penalty. Jurisdiction of High Court to make observations on penalty imposition. Delay in challenging Board's order and seeking reference.

Analysis:
The petitioner, a joint-stock company, challenged the validity of an order by the Board of Revenue for Rajasthan and a subsequent show cause notice for penalty under the Rajasthan Sales Tax Act, 1954. The petitioner had purchased cotton within Rajasthan with a declaration to resell within the state but transferred part of the cotton outside Rajasthan, leading to purchase tax and penalty imposition by the assessing authority. The Deputy Commissioner partially allowed the appeal, maintaining the tax but setting aside the penalty. Both parties filed revisions before the Board, which dismissed them. The Board referred a question of law to the High Court regarding the applicability of certain provisions. The High Court's decision clarified that no sales tax was leviable on the purchased cotton, but the Board's subsequent order directed the assessing authority to pass fresh orders considering the High Court judgment. The petitioner argued against the jurisdiction of the High Court to comment on penalty imposition, while the department raised issues of delay and the preliminary stage of the proceedings.

The High Court noted that the petitioner could have sought a reference on the law question arising from the Board's order but did not do so, allowing the assessing authority to resume proceedings and issue a show cause notice for penalty. While the High Court's order did not explicitly direct penalty proceedings, the Board interpreted it as such under the Act. The Court acknowledged the lack of detailed examination on penalty imposition in its previous order but emphasized that the petitioner still had the opportunity to challenge the penalty before the assessing authority. Despite the delay in challenging the Board's order, the Court declined to interfere and dismissed the petition, allowing the assessing authority to determine the levy of penalty based on the law and circumstances. The Court highlighted that the petitioner could present its defense during the penalty proceedings.

In conclusion, the High Court dismissed the petition, emphasizing that the assessing authority had the discretion to decide on the levy of penalty based on legal provisions and the specific case circumstances. The Court maintained that the petitioner could contest the penalty imposition during the ongoing proceedings before the assessing authority.