1980 (4) TMI 287 - HC - VAT and Sales Tax

Issues Involved:
1. Revival of Penalty Orders Post-Amendment
2. Applicability of Section 43 of the State Act Post-Amendment
3. Merits of the Orders Passed in Revision by the Commissioner

Detailed Analysis:

1. Revival of Penalty Orders Post-Amendment:
The petitioner contended that the Central Sales Tax (Amendment) Act, 1976, did not revive the penalty orders canceled by the Commissioner of Sales Tax on 27th July, 1976. However, the court held that the validating provisions in section 9 of the amending Act, specifically sub-section (2), override any prior judgment, decree, or order. The court emphasized that the "notwithstanding" clause in sub-section (2) renders the Commissioner's rectification order inoperative, thereby reviving the original penalty orders. The court further explained that clauses (b) and (c) of sub-section (2) support this interpretation by making any previous orders directing refunds ineffective and allowing for the recovery of refunded penalties as arrears of tax.

2. Applicability of Section 43 of the State Act Post-Amendment:
The petitioner argued that section 43 of the State Act, which provides for penalties for concealment of turnover, was not applicable under section 9 of the Central Act even after the amendment. The court rejected this argument, stating that sub-section (2A) of section 9 explicitly includes "all the provisions relating to offences and penalties," which encompasses penalties in addition to those for offences. The court clarified that the penalties under section 43 of the State Act are applicable to the assessment of tax under the Central Act due to the amending Act's provisions. The court also noted that the penalties referred to in section 9(1)(a) of the amending Act and sub-section (2A) of section 9 of the Central Act are not limited to penalties for offences but also include penalties related to the assessment process.

3. Merits of the Orders Passed in Revision by the Commissioner:
- First Period (25th October, 1965, to 12th November, 1966): The court found no error in the Commissioner's order dated 28th February, 1975, which upheld the penalty. The discrepancy between the returned turnover and the assessed turnover, along with the petitioner's inadequate explanation, justified the inference of concealed turnover and false returns. The court concluded that there was no apparent error of law or jurisdiction in the order.

- Second Period (3rd November, 1967, to 21st October, 1968): The court found that the assessment order for this period had been set aside and remanded to consider E-I forms, which could reduce the assessed tax. Consequently, the Commissioner should have also set aside the penalty order, as the quantum of penalty is related to the amount of tax. The court distinguished this case from Jawaharlal Ramcharan v. Sales Tax Officer, noting that there was a likelihood of tax reduction upon reassessment. Therefore, the penalty order should have been remanded along with the assessment order.

Conclusion:
The petition was partly allowed. The court quashed the order dated 30th August, 1974, by the Commissioner maintaining the penalty of Rs. 9,200 for the second period and the corresponding penalty order dated 12th January, 1972, by the Assistant Commissioner. The Assistant Commissioner was permitted to reimpose the penalty according to law. There was no order as to costs, and the security amount was to be refunded to the petitioner.

Petition partly allowed.

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