1981 (2) TMI 215 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Interpretation of the expression "tax paid" in explanation (1) to section 36(2)(c) of the Bombay Sales Tax Act, 1959.
2. Whether the amount of set-off granted to the assessees under rule 43 of the Bombay Sales Tax Rules, 1959, should be included in the "tax paid" by the dealer.

Summary:

Issue 1: Interpretation of "tax paid" in explanation (1) to section 36(2)(c) of the Act

The respondents, registered dealers under the Bombay Sales Tax Act, 1959, filed periodic returns and paid an aggregate sum of Rs. 21,114.28 as tax into the Government treasury. They also claimed a set-off under rule 43 of the Bombay Sales Tax Rules, 1959. The Sales Tax Officer assessed the tax payable at Rs. 32,874.39 and allowed a set-off of Rs. 7,670.99. However, the officer held that the tax paid into the treasury was less than eighty percent of the assessed tax, deeming the respondents to have concealed turnover or furnished inaccurate turnover u/s 36(2)(c), and imposed a penalty. The Tribunal deleted the penalty, leading to the reference question: whether "tax paid" includes the set-off amount.

Issue 2: Inclusion of set-off in "tax paid"

The court examined the form of assessment orders and returns, which showed that the total tax assessed includes the set-off amount. The set-off is deducted to arrive at the net tax payable, indicating that the set-off is treated as tax paid by the dealer. The court noted that the set-off rules and section 42 of the Act consider the set-off as tax paid by the dealer. The explanation in section 36(2)(c) does not specify "tax paid into the Government treasury," supporting the inclusion of the set-off amount in "tax paid."

The court also referenced a similar provision in the Gujarat Sales Tax Act and a corresponding judgment, which held that set-off can be considered as tax paid. The principle of favoring the assessee in cases of ambiguity, especially in penalty provisions, was also applied.

Conclusion:

The court answered the reference question in the affirmative, holding that "tax paid" includes the set-off amount granted to the assessees. The applicant was ordered to pay the respondents' costs of Rs. 300.

Reference answered in the affirmative.